This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Wheat Bear Market: Blame a Peace Seeking Russia and Good Weather

NEW YORK ( TheStreet) -- Wheat prices moved into bear market territory this week, with dissipating winter storms in the U.S. and rather strife between Russia and Ukraine cited as the main catalysts. The improved outlook has not caught up with farm machinery makers such as Deere  (DE - Get Report) and Caterpillar  (CAT).

The U.S. Department of Agriculture said Wednesday that global wheat output would increase to 701.6 million metric tons this year from the 697 million forecast last month as production outside the U.S. increases.

The report spurred wheat futures for July delivery to fall to $5.8875 a bushel, a more than 20% decline from its highs of $7.44 a bushel in May.

The USDA report deviates widely from the sentiment wheat speculators felt at the beginning of the year. In January, wheat prices were bid higher as speculators saw political turmoil in Ukraine and severe winter storms in the U.S. as reasons global output would decline in 2014.

The winter storms lasted much of the first quarter, and tensions remained elevated between Russia and Ukraine for many months, but for the most part, optimism for the future has picked up.

Summer weather is expected to be a mix of rain and sunshine with warmer temperatures throughout the U.S. This should repair some of the winter damage and increase U.S. yields out by September.

A more impressive story, however, has been the drastic turnaround in sentiment regarding Russia.

After Ukrainian President Viktor Yanukovych was exiled from the country for his ties to Russia, and Crimea was annexed from Ukraine, many believed a full-on war was imminent.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DE $87.51 -1.61%
AAPL $124.75 -1.13%
FB $80.78 -1.86%
GOOG $524.05 -1.83%
TSLA $206.79 0.04%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs