Wheat Prices Could Test the Key Resistance

Sean Brown - Author

Dec. 15 2015, Published 9:54 a.m. ET

Trend in wheat prices

December wheat prices were trading above the key support level of $4.85 per bushel on December 14, 2015. The firm resistance at $3.90 per bushel for wheat could restrict the price movement on the upward trend. However, the wheat prices were trading above the key 20-day moving average of $4.77 per bushel.

Wheat prices could be $4.80–$4.95 per bushel in the short term.

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Price drivers

Speculation of unfavorable weather conditions in the Midwest region in the US, favorable export inspections, and Taiwan’s export contract of 87,000 tons of milling wheat supported US wheat futures on December 14, 2015.

However, the elimination of Argentina’s export tariff and the appreciation in the US dollar by 0.01% on December 14, 2015, dragged the wheat futures prices on December 14. The prices received support due to fears that higher long positions by market players could bring a bear run for wheat in the near term.

Stocks review

The progress in wheat prices negatively impacts the input cost for food businesses. On December 14, 2015, J.M. Smucker (SJM) and Pilgrim’s Pride (PPC) fell by 0.34% and 1.5% for the fifth and third consecutive day. In contrast, Hormel Foods (HRL) continued to rise for the third straight day by 0.78% on December 14, 2015. General Mills (GIS) remained volatile for the fifth trading day. It rose by 0.55% on December 14, 2015. ETFs like the VanEck Vectors Agribusiness ETF (MOO) fell for the second consecutive day. It fell by 2% on December 14, 2015. It fell by 8.5% in last two trading days.


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