Wheat Prices Rise Sharply above the Crucial Resistance


Jan. 12 2016, Updated 8:07 a.m. ET

Trend in wheat prices

Wheat futures contracts for March expiry were below the key resistance level on January 8, 2016. The rise was sharper due to anticipation shifting the price movement from downward to upward. It was the second consecutive day that prices remained volatile. The contract’s volume rose for the second straight day by 31.5%. The open interest rose by 0.59% on January 8, 2016. The prices were still below the crucial moving averages on the day.

The above chart suggests that prices would be $4.65–$4.80 per bushel in the near term.

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Price drivers

Wheat prices rose on January 8, 2016, due to supportive market movements in the Chinese economy and short covering before the crucial report release.

Favorable weather conditions in the US Midwest, the US Delta, and the Southeastern regions supported wheat prices. The US dollar appreciated by 0.13% on January 8, 2016. This had a negative impact on wheat exports. The higher US dollar isn’t favorable for export markets.

Stocks review

The rise in wheat prices would induce the cost of materials for the food companies. The companies would be impacted negatively due to rising costs. On January 8, 2016, due to the rise in wheat prices, J.M. Smucker (SJM) and Hormel Foods (HRL) fell by 0.22% and 0.64% for the third and second consecutive trading days. Prices fell by 2.6% and 2.4% during this period. General Mills’ (GIS) prices rose by 0.31% on January 8, 2016, after falling for six consecutive days. Pilgrim’s Pride (PPC) continued its upward price movement for the second trading day. It rose by 3.3% on the day. ETFs like the VanEck Vectors Agribusiness ETF (MOO) fell by 0.79% for the seventh consecutive trading day on January 8, 2016.


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