Unfavorable US Wheat Export Outlook Pressures Wheat Prices

Sean Brown - Author

Dec. 23 2015, Published 11:53 a.m. ET

Wheat prices fell

Wheat futures prices for March contracts, trading on the CBOT (Chicago Board of Trade), fell by 1.5% and closed at $4.71 per bushel on December 22, 2015. Wheat futures prices fell due to the negative impact of US wheat exports. The exports were impacted by Argentina’s efficiently priced wheat. ETFs like the Teucrium Wheat Fund (WEAT) followed the CBOT and fell by 1.20% on December 22, 2015.

Argentina eliminated the export tariff and lifted the currency controls. This supported Argentina’s wheat price competency in the international markets. In the export trades, it’s priced near the European wheat. The export market capturing the competition could be brutal for US wheat due to the anticipated fall or elimination of tariffs from Russia. Higher competition from Argentina’s wheat had a negative impact on US wheat exports on December 22, 2015.

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Weather conditions in the US Great Plains would be above normal in the near term. The northern region of the US Great Plains would get showers. The wheat plants could get dragged into dormancy at the end of the week on December 27, 2015. The Canadian Prairies are expected to have above average temperatures. However, the region has light precipitation in the forecast.

In contrast, the southern regions in the US Great Plains will remain dry with above average temperatures at the end of the week on December 27, 2015. The warmer-than-average weather conditions would support the wheat plants’ progress. The output pushed the wheat futures prices down on December 22, 2015.

Food companies’ stock

The fall in wheat prices would increase food companies’ profitability by reducing the production cost. Businesses like General Mills (GIS), Hormel Foods (HRL), and Pilgrim’s Pride (PPC) rose by 1.7%, 1.1%, and 1.3% on December 22, 2015. ETFs like the VanEck Vectors Agribusiness ETF (MOO) rose by 1.50% on December 22, 2015. In contrast, J.M. Smucker (SJM) fell by 0.02% on the day.


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