Wheat Prices Traded above the 20-Day Moving Average



Trend in wheat prices

March wheat futures contract prices were near the critical support of $4.75 per bushel for the second consecutive day on February 2, 2016. Prices held near the crucial support level. Wheat prices rose during the day above the critical resistance of $4.80 but didn’t find support at that level. The prices fell back to the lower support level. The contract’s volume rose by 51.7% on February 2, 2016. The open interest rose by 0.10%. Prices traded above the 20-day moving of $4.74 per bushel even though the prices didn’t change. The prices could continue in a downward channel.

The above chart suggests that prices could be $4.60–$4.80 per bushel in the short term.

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Price drivers

Favorable weather conditions in the US wheat belt supported the wheat production consensus on February 2, 2016. The US dollar depreciated by 0.21% on February 2. It supported the US wheat export sentiment on the day.

In contrast, the Egyptian-French quality cues stretched and negatively impacted US wheat export sentiments on February 2, 2016.

Stocks review

The increase in wheat prices supports fertilizer companies. It raises the farm incomes that drive fertilizer sales. Share prices of Potash Corporation of Saskatchewan (POT) and Terra Nitrogen (TNH) fell for the second straight trading day by 4.9% and 1.8% on February 2, 2016. The stocks’ prices fell by 7.4% and 4.5% during the two days of downward movement. The prices of Intrepid Potash (IPI) and Monsanto (MON) fell by 8.7% and 7.6% on February 2, 2016. They registered a fall of 12.4% and 3.4% during the last two days of downward price movement. The PowerShares DB Commodity Index Tracking Fund (DBC) fell by 1.8% for the second consecutive trading day on February 2, 2016, with no change in wheat prices. It fell by 3.6% during the period.


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