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Wheat Prices Continue to Sharpen Due to Downward Movement

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Trend in wheat prices

March wheat futures contracts were trading near the key support level of $4.85 per bushel on December 17, 2015. The downward price movement sharpened on December 17, 2015. Prices were volatile on the day. However, prices rose slightly on December 17, 2015, to the previous day close. Wheat prices continued to trade below the key 20-day, 50-day, and 100-day moving averages of $4.85, $4.99, and $5.02 per bushel on the day.

Wheat futures prices could be $4.70–$4.90 per bushel in the near term.

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Price drivers

The Weekly Export Sales report from the USDA (U.S. Department of Agriculture) supported the wheat export sentiment on December 17, 2015. Research firm Strategie projected lower wheat production compared to the previous estimate. It supported wheat futures prices on December 17, 2015.

However, the US Dollar Index appreciated by 0.66% on December 17, 2015. It supported the wheat export sentiment.

Stocks review

Higher wheat prices means increased costs for food businesses. With the rise in wheat prices on December 17, 2015, companies like J.M. Smucker (SJM), General Mills (GIS), and Hormel Foods (HRL) fell by 0.35%, 3.3%, and 0.44%. They fell after rising for two, five, and three days by 1.7%, 2.3%, and 1.1%, respectively. Pilgrim’s Pride (PPC) fell by 0.05% on the second trading day. It registered a total fall of 1.3%. ETFs like the VanEck Vectors Agribusiness ETF (MOO) fell by 1.8% on December 17 after rising for two days.

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