Wheat ETF Flourishes as Crop Outlook Dampens | ETF Trends

Poor weather conditions continue to delay harvests and raise concerns about the quality of the crops, fueling a surge in wheat futures and related exchange traded fund.

The Teucrium Wheat Fund (NYSEArca: WEAT) jumped 2.2% Monday on heavy trading, with mid-day volumes at over five times the daily average. WEAT rose 12.3% over the past week and increased 10.4% over the past month. The ETF is now trading back above its 200-day simple moving average.

Meanwhile, CBOT wheat futures were also 2.2% higher Monday and are on track for their ninth largest monthly gain ever, according to Kimble Charting Solutions.

Wheat prices have been strengthening after an excessively wet weather system pummeled the crop growing regions in the Midwest, ABC reports. Some areas across the Midwest experienced up to six times more rain than normal int he past two weeks and more is expected to come. [Grains ETFs Bounce as Weather Interrupts Normal Planting Season]

National Weather Service hydrologist Mark Fuchs warned that more rain will come later this week in Missouri, Illinois, Indiana and Michigan, “possibly a lot,” reports Jim Salter for the Associated Press.

“The US southern plains, which is where the hard red winter wheat crop comes from, there’s been a lot of talk of flooding and excessive rains and the soft red winter wheat crop has also seen more moisture than it would like, that’s delaying harvest, but it’s also creating quality concerns now as they’re trying to get the crop off and the crop is ripe and ready to go, but it’s just getting more moisture than it would like to see,” ProFarmer Australia analyst Hannah Janson said in the ABC article.

Meanwhile, the global wheat market is also being pressured by crop concerns in Europe and Canada where dry and hot weather conditions are desiccating crops.

“Canada has also had a very dry season so far and that is creating concern for the Canadian spring wheat crop,” Janson added.