Weaker Export Cues Dragged Wheat Prices Down



Wheat prices fell

March wheat futures contracts on the CBOT (Chicago Board of Trade) fell by 1.3% and closed at $4.66 per bushel on February 5, 2016. Wheat futures prices fell due to weaker export cues in the near term. The Teucrium Wheat Fund (WEAT) followed the price movement on the CBOT. It fell by 1.5% on February 5, 2016.

The Egyptian ergot contamination policy and the wheat export sentiments have been lower despite the confidence building statement from the GASC, Egypt’s State Authority, and the Agriculture Minister. Exporters and traders boycotted the Egyptian wheat tender. There isn’t a consensus that US wheat could get a significant benefit from the situation. It’s due to geographic proximity. Although the freight rates are trending near record lows, the situation could get worse for wheat exports in the near term. On February 5, 2016, there were weaker export sentiments due to the latest poor export report. This dragged prices down.

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Statistics Canada’s report on February 5, 2016, indicated that the inventories at the end of calendar 2015 could fall higher than anticipated. The projection revealed that wheat inventories could be more than 19% lower from the previous year at 20.7 million tons. It’s the lowest in the last eight years. It’s also below analysts’ expectations of 21.8 million tons. The weaker-than-anticipated wheat inventory supported prices in the near term.

Food companies stock

With the fall in wheat, food companies rise as their cost of production goes down. Hormel Foods (HRL) rose by 0.65% on February 5, 2016. J.M. Smucker (SJM), Pilgrim’s Pride (PPC), and Campbell Soup (CPB) fell by 0.37%, 0.22%, and 0.90% on February 5, 2016. The Power Shares DB Commodity Index Tracking Fund (DBC) fell by 0.63% on the day.


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