Wheat prices drop
Wheat March futures trading on the Chicago Board of Trade (or CBOT) fell by 2.0% and closed at $4.69 per bushel on January 11, 2016. Wheat futures prices fell due to a weak Weekly Export Inspections Report from the U.S. Department of Agriculture. The Teucrium Wheat ETF (WEAT) fell by 1.7% on January 11 following the price movement on CBOT.
The U.S. Department of Agriculture has released its Weekly Grain Export Inspections Report for the week of January 1–7, 2016. The wheat export inspection for that week showed 393,688 metric tons, which was 12.3% higher than the previous week and 33.8% more than the prior two-week average. Despite the rise in export inspections, the year-to-date wheat exports of 12,551,116 metric tons were 11% lower than the year before. Progress in wheat exports that was weaker than the previous year kept futures prices under pressure on January 11.
The week ending January 23, 2016, could bring unfavorably cold weather conditions to the wheat-producing region of the former Soviet Union. The forecast of snow during the week ending January 16, 2016, could be positive, as the snow cover helps protect the plants from winterkill. The western region of Ukraine, where the fields have lower snow cover, would benefit the most. It would strengthen the output sentiment from the Black Sea area. The rising production sentiment from key competitive exporting countries unfavorably affected wheat futures prices on January 11, 2016.
Food companies stock
The fall in wheat prices supports food businesses, as wheat is a staple grain. Food companies such as General Mills (GIS), JM Smucker (SJM), and Pilgrim’s Pride (PPC) rose by 1.1%, 0.58%, and 1.7%, respectively, on January 11, 2016. However, Hormel Foods (HRL) fell by 0.15%. The VanEck Vectors Agribusiness ETF (MOO) fell by 0.66% on January 11 with the decline in wheat prices.