Wheat futures and commodity-related ETF were one of the few areas of the market that strengthened on Friday as value traders looked to pick up a potentially oversold category.
The Teucrium Wheat Fund (NYSEArca: WEAT) increased 2.8% Friday after declining 4.6% over the past week. Meanwhile, CBOT wheat futures were 3.3% higher to $5.035 per bushel, trading back above the key $5 level.
Wheat futures traded below $5 a bushel on Wednesday for the first time in almost six weeks amid technical selling and concerns over falling U.S. export demand, according to Business Recorder.
The USDA revealed inventories in the 2018-2019 year that started June 1 will be the second-highest on record, Successful Farming reports. The International Grains Council also raised its projections for global wheat production.
The stronger U.S. dollar also pressured overseas demand for USD-denominated commodities.
Meanwhile, Russia’s agriculture ministry raised forecasts for the country’s 2018 grain crop by 3 million tonnes to 109 million tonnes. Russian Agriculture Minister Dmitry Patrushev and traders of Russian grain will touch upon potential exports at a routine meeting, which further diminished the outlook for USD wheat in the international markets.
“With Russia saying their crop is better than expected, and the dollar being up, it certainly doesn’t help anyone’s thoughts that we’re going to export more of our crop any time soon,” Mark Gold of Top Third Ag Marketing told Reuters.
While the negatives have been piling up, some bargain hunters think the recent selling could be overdone.
“But the latest drop (in wheat prices) is unwarranted as supplies are likely to tighten next year. Overall production in Russia and Australia is lower and global demand for wheat remains strong,” Ole Houe, director of advisory services at brokerage IKON Commodities, told Reuters.
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