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Weekly Export Sales Report Supported Wheat Prices

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Jan. 4 2016, Updated 7:45 a.m. ET

Wheat prices rose

March wheat futures trading on the CBOT (Chicago Board of Trade) rose slightly by 0.05% and closed at $4.70 per bushel on December 31, 2015. Wheat futures prices rose due to the inline Wheat Export Sales report from the U.S. Department of Agriculture. ETFs like the Teucrium Wheat Fund (WEAT) followed the prices on the CBOT. It rose by 0.02% on December 31, 2015.

For the week ending on December 24, 2015, the USDA’s Foreign Agriculture Services released the weekly export sales report on December 30, 2015. For wheat, the net weekly export sales were 363,504 metric tons. The sales were in line with analysts’ projections. The sales were 11% higher than the previous four-week average but 2% lower than the last week. The primary destinations for the rise in wheat export sales were Indonesia, Italy, Mexico, Jamaica, Japan, and Malaysia. Chile’s export sales were lower. In line with the consensus projection, the weekly wheat export sales supported futures prices on December 31, 2015.

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In major wheat producing regions in Russia and Ukraine, the cold weather conditions wouldn’t be a concern for a fall in the wheat acreage for the next week. The significant parts of the acreage have about four inches of snow. This would protect the winter wheat crop from the winterkill in the dormancy period. The forecast has snowfall in the eastern, central, and southwestern Volga Valley region that would support the wheat output sentiment. It supported the wheat output projection from key competitive countries to US wheat. It kept wheat prices under pressure on December 31, 2015.

According to Allendale reports, the wheat harvest in Argentina is 75% complete. It’s less than last year’s progress of 88% during the same period. The lower-than-expected wheat harvest progress kept output sentiments low. It supported US wheat prices on December 31, 2015.

Food companies’ stock

The rise in wheat prices had a negative impact on food businesses’ values. It raised their cost of inputs. Food companies like General Mills (GIS), J.M. Smucker (SJM), Hormel Foods (HRL), and Pilgrim’s Pride (PPC) fell by 1.5%, 0.49%, 0.68% and 1.03% on December 31, 2015. ETFs like the VanEck Vectors Agribusiness ETF (MOO) fell by 0.92% with the fall in wheat prices on December 31, 2015.

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