Efforts by the current presidential administration to plant more wheat have been stifled. That’s due to lower prices and increased supply flowing from the Black Sea. In turn, that could potentially upset global markets, thereby pushing prices higher.
Given the current trend in wheat’s prices, this might be seen as a reach. But any sliver of bullishness is good news for traders and investors who are long the commodity. The linked Reuters report noted that wheat prices have hit nine-year lows. But harsh weather could add some upward price pressure.
“Farmers planting less wheat in the world’s No. 4 wheat exporter could be a concern for global markets as the U.S. Department of Agriculture (USDA) forecasts world wheat supplies will tighten to a nine-year low. And increasingly extreme weather creates more uncertainty for global production of the staple grain,” the report said.
President Biden has been pushing to add more funding to global food aid. Efforts to plant more wheat could be part of that larger initiative. Wheat prices spiked to record highs during Russia’s invasion of Ukraine in February 2022, but has been sliding since. According to the Reuters report, wheat plantings in the U.S. are down 5% this year. That corroborates with the downtrend in global wheat exports.
A visual of that surge and subsequent dive of wheat prices is evident in the S&P GSCI Wheat index. The spike in early 2022 gave way to the current downtrend the last few years. But it could also mean prices might be in an area of value for potential investors.
Easy Wheat Exposure
Prospective investors who are intrigued by the prospect of adding corn exposure as a diversification tool may want to consider using the Teucrium Wheat Fund (WEAT ). Given the current prices in wheat, it’s an ideal time to buy into the weakness, thereby taking advantage of prices ahead of future upside. If supply constraints elevate corn prices in the future, it’s an ideal time to purchase the commodity.
WEAT offers an easy way for investors to gain exposure to the price of wheat futures in a brokerage account. Long-term investors looking to add wheat to their portfolio as a diversification component can use WEAT. Short-term traders can use the fund to get exposure to wheat futures without having a margin account.
For more news, information, and analysis, visit the Commodities Channel.
