An Historic Potential Opportunity In Wheat

seekingalpha04-02

Wheat prices have dropped by about 60% since their peak in 2022, presenting a value-oriented trading opportunity.Anticipated reductions in planted acreage and recent disruptions in major wheat-...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAn Historic Potential Opportunity In Wheat\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-02 00:56 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4681532-historic-potential-opportunity-in-wheat><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Wheat prices have dropped by about 60% since their peak in 2022, presenting a value-oriented trading opportunity.Anticipated reductions in planted acreage and recent disruptions in major wheat-...</p>\n\n<a href=\"https://seekingalpha.com/article/4681532-historic-potential-opportunity-in-wheat\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"WEAT","symbol_name":"Teucrium Wheat Fund","start_time":0,"source_url":"https://seekingalpha.com/article/4681532-historic-potential-opportunity-in-wheat","article_id":"2424044723","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/479629438/image_479629438.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2424044723","pubTimestamp":1711990599,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Wheat prices have dropped by about 60% since their peak in 2022, presenting a value-oriented trading opportunity.Anticipated reductions in planted acreage and recent disruptions in major wheat-produci","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"WEAT":"Teucrium Wheat Fund"},"translate_title":"小麦的历史性潜在机遇","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"WEAT":1},"content_text":"Wheat prices have dropped by about 60% since their peak in 2022, presenting a value-oriented trading opportunity.Anticipated reductions in planted acreage and recent disruptions in major wheat-producing countries could lead to a rebound in wheat prices.The Teucrium Wheat ETF (WEAT) is a speculative buying opportunity for commodity investors to gain exposure to the wheat market.eclipse_images Wheat is admittedly not one of the sexiest commodities, and it has consequently been ignored by traders due to its staid reputation. About the only time the key staple crop receives any meaningful attention is when there's a sizable increase in food prices over a sustained period (similar to what we saw in the 1970s, and again in the war-driven inflationary years of the mid-2000s). The most recent major bull market in wheat futures was during the Covid-era years of 2020 to early 2022, which saw most agricultural commodities in the ascent due to the massive disruption in the global supply-chain along with domestic U.S. crop reductions. During that two-year period, wheat prices soared over 160% before peaking at their highest level ever at $13.50 per bushel. Barchart Since then, front-month wheat futures prices have collapsed appreciably (thanks in large part to Russia's invasion of major wheat producer Ukraine); they currently stand at $5.60/bushel as of the end of March. That represents a notable drop of about 60% from the peak price two years ago. But more significantly, it also represents an equally big opportunity for value-oriented traders and investors-including for those with a time frame of up to 12 months. For some fundamental context, wheat as a U.S. farm commodity ranks third behind corn and soybeans in terms of planted acreage, production and gross farm receipts, according to the U.S. Department of Agriculture (USDA). On a global basis, however, wheat is the second-largest grain produced, both in terms of acreage and total production volume. Moreover, wheat planted acres in the U.S. have actually been in long-term decline. The crop's domestic acreage peaked in 1981-around the same time as the wave of consumer price inflation that characterized most of the 1970s and early '80s-and from there planted wheat has declined by nearly 39 million acres, while production has decreased by almost a billion bushels, according to the USDA. USDA On a short-term basis, U.S. wheat production for both winter and spring wheat for full-year 2024 is forecast by USDA to be 47 million acres, down 5% from last year. Plantings this year are also expected to be lower in major wheat producing countries like Russia (down 4%) and Ukraine (down 5%), according to private analyst forecasts. All told, this anticipated reduction in planted acreage this year-combined with the longer-term downward trend in domestic wheat plantings-sets the stage for a potential rebound in wheat prices in the coming months. Meanwhile, a major Russian grain trader, Petr Khodykin, told Bloomberg that his company's wheat exports have been blocked by the country's agricultural watchdog, which \"faulted its cargoes for not meeting safety and quality standards\" and resulted in \"huge losses\" for his firm, TD Rif (Russia's second-biggest grain trader). On a related note, the European Union is set to place tariffs of up to 50% on Russia's grain imports, a move many analysts believe will increase wheat prices in the EU. The recent developments in the key global breadbaskets of Russia-Ukraine have even prompted some to predict a \"Black Swan\" event for the wheat market. This brings me to another point that I think is worth repeating. It was recently made by the famed market technician Tom McClellan, who wrote: [T]he movements of gold prices tend to get echoed about a year later in the prices of wheat futures…Because grains are an important input into lots of finished products for food, including meat, a rise in grain prices generally is going to lead to rising food prices. 321Gold He noted further that after bottoming in October 2022, gold prices have been fairly robust since then. Wheat prices, meanwhile, lagged gold's bottom by almost a year before hitting a major low last September. From there, wheat has largely followed gold's overall rising pattern. And while wheat prices have lately shown some weakness, if the historical correlation repeats, wheat should resume its climb and follow gold's generally positive pattern in the coming months-particularly since wheat market fundamentals support the bullish case. To that end, I consider the Teucrium Wheat ETF (NYSEARCA:WEAT) to be a speculative buying opportunity for commodity investors and have recently added to my own holdings. WEAT is a lower-cost way to have exposure to the wheat price without the added risk of having to purchase wheat futures directly. The ETF reduces the risk by holding three actively traded CBOT wheat contracts, which include the Chicago Soft Red Winter Wheat futures contracts for July, September and December 2024. WEAT is actively traded with an average daily trading volume of around 586,000 and having over $157 million in assets, with an expense ratio of 0.28% (per Teucrium's web site). By way of disclaimer, it should be kept in mind that there's a greater risk to trading cyclical commodities like wheat, vis-à-vis other risk assets like equities. For that reason, an unexpected slip in projected crop plantings or weather patterns could upset the wheat market and force prices lower. However, putting aside the possibility of an exogenous weather-related event, the wheat market has quite a few positive supply-related factors in its favors-some of which have been building for many years (as mentioned above).  On the demand side of the equation, with global wheat consumption in 2024 forecast to remain historically high at over 800 million tons (driven mainly by rising food and animal feed consumption), wheat has an additional tailwind to bolster the already favorable supply outlook. All told, wheat has the potential to increase significantly from current multi-year low levels in the months ahead.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2424044723"}