Trend in wheat prices
Wheat futures prices for March contracts were trading near the support level of 460 cents per bushel on February 8, 2016. Prices continued their downward movement for the third consecutive day. Open interest fell by 4.7% on February 8, 2016. The price is trading below the key 20-day, 50-day, and 100-day moving averages. The consensus indicates that prices could remain in the further downward channel.
The chart above shows that prices might stay in the range of 450 to 470 cents per bushel in the short run.
Despite the strong weekly export inspection report in the previous week, wheat prices were negatively affected by the higher supply and weaker demand sentiment on February 8, 2016. The US dollar depreciated by 0.32% on February 8, 2016, and supported the export sentiments.
The fall in wheat prices supports food businesses, as it pulls down the cost of input materials. With the drop in wheat prices, Pilgrim’s Pride (PPC) and J M Smucker (SJM) rose by 2.0% and 0.15%, respectively. Hormel Foods (HRL) rose by 3.1% with the fall in wheat prices on February 8, 2016. Campbell Soup Company (CPB) rose by 0.7%. The PowerShares DB Commodity Index Tracking Fund (DBC) dropped by 0.48% on the day.