Commodity Quick Win by the Algorithm: W1 Increases Amid Drought

Commodity Quick Win by the Algorithm:

On June 28, 2017, the I Know First algorithm issued a bullish 14-day forecast for W1 wheat futures contract (CBOT:W1). W1 had a signal of 3.92 and a predictability of 0.05. As a result, in accordance with the forecast, the futures contract increased by 18.15% over a 14-day period, creating a quick win by the algorithm.

Commodity Quick Win by the Algorithm

W1 is a wheat commodity futures contract that is traded on the Chicago Board of Trade (CBOT). This contract includes wheat from the Chicago Switching District, Indiana Switching District, Ohio Switching District, Northwest Ohio, regular facilities on the Mississippi River, and St. Louis – Alton Territory. 

Commodity Quick Win by the Algorithm

W1 futures contract continues to rise after concerns of possible drought in the U.S. Great Plains. Illinois, Indiana, and Ohio are a few of the states within this contract that are affected by this drought. The U.S. Department of Agriculture released a report verifying the wheat struggle. Dry and hot weather conditions have persisted throughout the spring and summer, causing multiple fires that have decimated wheat production levels. Spring wheat tends to have a higher protein content and is therefore used in artisan breads, rolls, and pizza crusts. This means that these wheat types are in higher demand, even before the drought.

The anticipated drought has led farmers and others to buy futures contracts at a higher rate, driving up the W1 price. Since it is of higher quality, the spring wheat is even more important for farmer profitability.  This helped cause the large volume increase in W1 trading. Additionally, the U.S. Wheat Associates named Vince Peterson its new president on July 1. Uncertainty with the new leadership also led to the volume trading.

W1 and wheat futures do not appear to be dropping anytime soon as long as the drought persists.

Current I Know First subscribers received this bullish forecast on W1 on June 28, 2017. 

Before making any trading decisions, consult the latest forecast as the algorithm updates predictions daily. You can use the algorithm for intra-day trading. The predictability tends to become stronger with forecasts over longer time-horizons such as the 1-month, 3-month and 1-year forecasts.