Trend in wheat price
Wheat futures prices for March delivery fell and traded near the key support level of 455 cents per bushel on February 12, 2016. Prices continued on a downward trend, falling for the seventh trading day out of the last ten trading days.
Wheat volumes fell by 33.5%, and open interest fell by 1.1% on February 12. Prices were trading below their moving averages on the day. The consensus expectation is that bearish fundamentals will keep prices under pressure and on a downward trend. However, the last four trading days have suggested that wheat’s current support at 355 cents per bushel may be strong.
The chart above indicates that prices could stay in the range of 455–465 cents per bushel in the short term.
The speculation of favorable weather conditions in the US wheat belt supported the output consensus on February 12. Stronger availability and weaker demand coupled with a loss of confidence from Egypt, the world’s top wheat importer, could keep prices down in the near term.
The US dollar appreciated by 0.41% on February 12, negatively affecting wheat export cues on the day.
Wheat’s price fall supports food businesses, as their profitabilities rise when their input costs fall. On February 12, the fall in wheat prices supported shares of food companies such as General Mills (GIS) and J.M. Smucker Company (SJM), which continued their upward movements, barring the previous day’s falls of 0.20% and 1.3%, respectively. Their shares rose by 1.6% and 0.61%, respectively, on the day.
Shares of Pilgrim’s Pride (PPC) partially recovered by 4.9% on February 12 from the previous day’s drop of 6.4%. In contrast, Hormel Foods (HRL) fell by 0.46% after two consecutive days of modest rises for a total of 0.60%.
The Market Vectors Agribusiness ETF (MOO) rose by 1.1% on February 12, 2016, after five successive days of falling by a total of 4.3%.
(Source – https://finance.yahoo.com/news/could-strong-support-drive-wheat-182853081.html)