Commodity ETF Alert October 2013 Issue
Commodity Outlook: Wheat
After an extended downtrend took wheat to $6.40 a bushel this summer, buyers are finally stepping up to the plate. In fact, the commodity jumped from $6.50 up to $7.00 in just the past few weeks.
Why the sudden shift in investor sentiment?
Recent global supply estimates reveal the essential grain’s fundamentals are quickly growing more bullish. In fact, the United Nations (UN) just cut their 2014-2015 world production forecast by 5 million tons in early October.
Citing crop losses due to freezing South American temperatures, the UN is dropping their global production estimate to 705 m tons in the next crop cycle.
But that’s just the start of it…
The UN is also slashing their 2013-2014 ending wheat inventory estimate to 163 million tons.
Not only is South America having weather difficulties, but Canada is experiencing unfavorable conditions which could drastically reduce yields this crop season.
What’s more, one of the world’s largest wheat exporters, Russia, is planting less winter wheat this Fall due to poor weather conditions. Analysts expect the wheat giant will be short-handed in the next crop cycle, which will further pressure global supplies.
What does all this information mean for the price of wheat?
Given the recent shift in market expectations, wheat has very likely seen its lows for the year. While we may see a bit of profit taking from investors who bought the $6.50 lows in early September, odds are the price of wheat rises above $7.00 in the near future. From there, prices could easily rise to the $8.00 mark should supply/demand conditions worsen.
As a result, now is the perfect time to establish a long position in the wheat market. We’ll do it via the Teucrium Wheat Fund (WEAT).
Technically Speaking:
WHAT TO DO NOW:
The Teucrium Wheat Fund (WEAT) is trading at $17.05.
Buy WEAT up to $17.30 per share.
Our profit target is $20.00 or more.
***Editor’s Note*** WEAT is a relatively new and therefore thinly traded ETF. Do not purchase above the maximum buy up to price of $17.30.
Category: Commodity Trading
