Ag commodities are so hot right now, and it isn’t because the ‘hippie’ grains being offered at Panera Bread (PNRA). Weather, geopolitical tension, and the currency volatility of grains like wheat and corn spiking recently.
To wit: wheat prices are up 6% in the past seven days (which is big for these types of commodities), and corn has popped 10% over the past 30 days. Bill Baruch, senior market strategist at iiTRADER, is not surprised.
“Prices are going higher, demand is going higher, we’ve had a very, very cold winter across the states..” Baruch says in the attached video. From weather point of view, the concern for Baruch and other traders is how will farmers ready new plantings. “Can we get the grains in the ground,” he asks, since corn typically has to be planted by May. “Is the weather going to permit it?”
But it’s not only the weather, we have geopolitical uncertainty in the mix too. Baruch notes Ukraine is the 3rd largest producer of corn, and also a large producer of wheat. Russia’s recent military exercises and troop amassing at the Ukrainian border are only going to fuel the fire and send grain prices higher.
In that vein, Baruch still sees a big move in grains, especially corn. Currently trading around $5 a bushel, he sees the commodity jumping to $6 in short order. “The risk premium is the upside,” for Baruch.
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- Commodity Markets