Dry conditions in many global crop producing regions has decimated wheat crops, supporting the elevated prices in the wheat futures market and pushing a wheat exchange traded fund up about 21% in the past three months.
In the U.S., the worst drought in half a century has decimated crops. Dan Manternach, agriculture director for Doane Advisory Services, believes that the winter crop in the U.S. Plains requires wetter conditions to establish itself, reports Rod Nickel for Reuters.
It isn’t just U.S. crops that are under duress. Drier conditions in Australian wheat-producing areas are also negatively affecting production. Russia, the world’s third largest wheat exporter last season, will cut down its wheat exports to 8 million tons this season, compared to 21.6 million tons last year, reports Marina Sysoyeva for Bloomberg.
“The bullish unknowns about the 2013 (wheat) crop are still there,” Manternach said in the Reuters article.
According to Rabobank International, wheat will trade at $8.8 per bushel in the fourth quarter, $9 per bushel in the first quarter and $9.2 in the second, reports Whitney McFerron for Bloomberg. Wheat for December delivery is currently trading around $8.8 per bushel.
Teucrium Wheat Fund
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Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.