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Stronger Demand Cues from Weekly Exports Drive Wheat Prices

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Wheat prices surge

Wheat March futures trading on the Chicago Board of Trade (or CBOT) increased by 2.4% and closed at $4.53 per bushel on March 4, 2016. Wheat futures prices rose from stronger export demand cues from the weekly export sales report. The Teucrium Wheat ETF (WEAT) followed the prices on CBOT and rose by 1.7% on March 4, 2016.

For the week of February 18–25, 2016, the USDA (U.S. Department of Agriculture) released its weekly export sales report on March 3, 2016. Net wheat weekly export sales for the week were 344,330 metric tons. It was 11% less than the previous week but 42% more than the prior four-week average.

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Primary destinations for the increase in wheat export sales were Mexico, South Korea, Ecuador, Italy, and Venezuela. However, reductions in wheat exports were recorded from Leeward Windward Islands and Nicaragua. Wheat net export sales were slightly stronger in the projected range of 200,000–600,000 metric tons. It supported wheat futures prices on March 3, 2016.

Weather conditions in the US Plains are changing unfavorably. Forecasts are for dry weather conditions shifting toward the central regions of the US Plains. Moist weather conditions are anticipated to shift to the eastern and southern regions of the US Plains. That would support the wheat crop in the southern and eastern regions of the US Plains.

A significant part of the Wheat Belt is in the central parts of the Plains, which are under a dryness threat. The idea of warm, dry weather conditions in key producing regions hurt the output consensus on March 3, 2016.

Stocks in the food industry

The advance in wheat prices hurts share prices of companies in the food industry. Despite the rise in wheat prices, stocks of J.M. Smucker (SJM), Pilgrim’s Pride (PPC), and ConAgra Foods (CAG) rose by 0.39%, 1.9%, and 0.77%, respectively, on March 3, 2016. In contrast, Dean Foods (DF) fell by 0.67% on March 3, 2016.The VanEck Vectors Agribusiness ETF (MOO) rose with the increase in the wheat prices on March 3.

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