Will Speculation of Poor Ukrainian Output Support Wheat Prices?


Nov. 25 2015, Updated 1:58 p.m. ET

Price trend

Wheat futures contract prices for December delivery were trading near 490 cents per bushel on November 20, 2015. Prices were climbing toward the support level of 495 cents per bushel. However, the speculative technical selling pushed wheat prices down and they did not reach the support level. The volume of contracts fell by 14.6% and open interest fell by 10.03% on November 20, 2015.

The day’s closing prices were lower than their 20-day, 50-day, and 100-day moving averages of 504, 503, and 508 cents per bushel. The reports of weaker crops are a result of unfavorable weather conditions from Russia, Ukraine, and India.

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Price driving factors

Favorable weather conditions in the US Great Plains might support the wheat crop. Huge supply and further supply-inducing news kept wheat prices down on November 20, 2015. Bearish fundamentals amid lower wheat exports pushed wheat prices down. Price support from the International Grain Council report did not occur as anticipated. The US dollar index also increased by 0.65%, which hindered exports further on November 20, 2015.

Prices received support from weaker production cues from the Black Sea region and India. Wheat futures prices may oscillate between 480 and 495 cents per bushel.

Ticker discussion

Sentiments of increased earnings further drove the prices of J.M. Smucker (SJM) on November 20, 2015. Hormel Foods (HRL) and Pilgrim’s Pride (PPC) continued their volatile pattern and fell by 0.97% and 0.62% on the day. General Mills (GIS) also followed a downward pattern with a 2.8% decline on November 20, 2015.

The VanEck Vectors Agribusiness ETF (MOO) continued to decrease on the second consecutive day by 0.60% on November 20, 2015.


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