Wheat Futures Jump on Expectation of Lower Production

The economics of supply and demand will continue to weigh heavily on wheat prices moving towards the end of 2022, and a potential drop in production could provide a catalyst for further increases.

Traders are already adjusting their bets to accommodate the potential for higher prices. The Department of Agriculture also acknowledged that supply is tight thanks to geopolitical forces, namely Russia’s invasion of Ukraine, which crimped wheat exports.

“The 2022 U.S. wheat harvest was smaller than previously forecast as dry soils in western growing areas cut into yields and caused heavy crop abandonment, the government said on Friday,” a Reuters article reported. “Chicago Board of Trade wheat futures surged 3% to their highest since July 11 as traders adjusted positions to reflect the lowered production view.”

“People all summer long, and really fall, have been saying the wheat crop was awful,” said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage. “This is a confirmation of what everybody has been saying, but they didn’t want to believe it was that bad.”

Rising wheat prices should benefit exchange traded funds (ETFs) that focus on the commodity, such as the Teucrium Wheat Fund (WEAT). The fund can be used as an ideal inflation hedge as wheat prices continue to rise alongside rising commodity prices, or investors can use the fund to add commodities to their portfolios for diversification.

Broader Agricultural Exposure

Whether it’s for a continued inflation hedge or to simply diversify a portfolio with more alternative assets as commodity prices push higher, a broad-based exchange traded fund (ETFs) from Teucrium is worth considering. When it comes to commodities exposure, most investors may think of oil, but agricultural exposure can also provide more commodities diversification.

For investors looking for agriculture exposure who don’t know where to start, this is where Teucrium can fill a void, offering investors an easy solution. Getting exposure to commodities doesn’t mean investors have to hold various positions.

Investors can have it all in the convenience of one ETF: the Teucrium Agricultural Fund (TAGS). The fund combines exposure to corn, wheat, soybeans, and sugar through other Teucrium ETFs that focus specifically on these commodities, essentially offering investors a fund of funds.

The fund includes the aforementioned Teucrium Wheat Fund (WEAT). To get that broad exposure, TAGS also includes the Teucrium Corn Fund (CORN), the Teucrium Soybean Fund (SOYB), and the Teucrium Sugar Fund (CANE).

For more news, information, and strategy, visit the Commodities Channel.