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Wheat Prices Trade above 20-Day Moving Average

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Trend in wheat price

Wheat futures contracts for March expiry were trading above the key support level of 485 cents per bushel on December 18, 2015. Wheat prices continued the downward price movement on December 18, 2015. The recovery in wheat prices resulted in prices above their 20-day moving average of 485 cents on the day. However, wheat prices were substantially below the 50-day and 100-day critical moving average of 498 and 502 cents per bushel.

Wheat prices could oscillate in the range of 475 to 490 cents per bushel in the short run.

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Price drivers

Precipitation in the US Wheat Belt on December 18, 2015, could drag wheat plants into dormancy, so weather forecasts supported futures prices on the day. Plus the decline in the Ukraine Agricultural Ministry’s projections supported US futures prices on the day. The US Dollar Index depreciated by 0.30% on December 18, 2015. Better export opportunities for US wheat exports in the next week supported wheat futures prices.

Higher production projections from the European Union on December 18 dragged wheat prices down due to increased export competition from the region.

Stock review

The rise in wheat prices results in higher cost of materials for food companies. On December 18, JM Smucker (SJM), Hormel Foods (HRL), and General Mills (GIS) dropped by 1.7%, 0.87%, and 0.52%, respectively. However, Pilgrim’s Pride (PPC) rose by 0.76% after two days of consecutive falls. The VanEck Vectors Agribusiness ETF (MOO) fell by 0.46%.

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