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Will Quality US Wheat Be Competitive in International Trade?

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Sep. 24 2015, Published 12:16 p.m. ET

Wheat prices advance

December wheat futures contracts traded on the Chicago Board of Trade (or CBOT) increased by 2.05% and settled at $4.96 per bushel on September 21, 2015. Wheat prices rose due to bright export expectations and less-than-expected winter planting. ETFs like the Teucrium Wheat Fund (WEAT) rose on September 21, 2015, by 2.09% following wheat futures prices on CBOT.

The Bloomberg consensus said that winter wheat planting for the fall was expected to be at 23%. Less-than-anticipated crop progress resulted in a wheat price increase on September 21, 2015. 

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The expectation of dry weather conditions for the next two weeks in the Black Sea region in Russia and Ukraine might hinder the plantation and early progress of the plants during the fall. It might give the US wheat exporters the window of opportunity for export that they have been seeking. According to the Commodity Weather Group, the weather changes might affect Australian wheat production, which would reduce supply and support the prices in international trades.

Impact on stocks

Fertilizer usage would stay steady if wheat prices increased, as farmers would continue fertilizer usage. This would affect fertilizer companies like the Mosaic (MOS), Potash (POT), Intrepid Potash (IPI), and Agrium (AGU). The shares of these businesses advanced on September 21, 2015, with the PowerShares DB Agriculture ETF (DBA).

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