We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Drought and geopolitical tensions are tightening global wheat supplies.
Australia and U.S. crop concerns continue to support wheat prices.
A stronger dollar or Iran ceasefire could cap further gains in WEAT.
Wheat-based Teucrium Wheat Fund (WEAT - Free Report) has jumped 9.9% over the past month and has added 6.1% over the past week. So far this year, the fund is up about 25%. The fund is up 26.3% from its 52-week low price of $19.78/share.
But for investors seeking momentum, should WEAT be on their radar? Are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea of where it might be headed:
WEAT in Focus
The underlying WHEAT FUTURES looks to reflect the daily changes of a weighted average of the closing prices for 3 futures contracts for wheat that are traded on the CBOT : the second-to-expire contract, the third-to-expire contract and the contract expiring in the Dec. following the expiration month of the third-to-expire contract. The fund charges 100 bps in fees.
Inside the Surge
Wheat prices hit a two-year high last week as traders locked in profits. The Russia-Ukraine conflict showed no signs of easing, with Russian forces resuming strikes on Ukrainian port infrastructure along the Black Sea coast in response to recent Ukrainian attacks on Russian vessels in the Sea of Azov and the Black Sea, per Trading Economics.
Plus, the USDA reported that U.S. wheat net export sales of 235,100 metric tons for the week ended July 9 were below market expectations. U.S. wheat production for the 2026/2027 season is on track to be the lowest since 1972/73. U.S. wheat ending stocks are forecast to be at a three-year low, per USDA.
This drop – representing a roughly 25% year-over-year reduction with a lower yield and harvested-to-planted ratio (per USDA) – is primarily driven by extreme, widespread drought, especially impacting winter wheat crops.
Meanwhile, supply concerns emerged in Australia – the third largest wheat exporter – due to hotter and drier conditions, Trading Economics noted. Investors should also note that the Iran war weighed on exports of fuel and fertilizer.
The sharp rise in fuel and fertilizer prices due to the war in Iran weighed on the seeding plans of farmers in Australia, per producer.com. Many farmers are deciding to plant less wheat and spread less fertilizer.
Plus, a dry growing season in Australia could also reduce the country's grain shipments by as much as 10 million tonnes in the upcoming season, equivalent to about 5% of annual global exports, per producer.com.
Can the Rally Last?
The fund might continue its strong performance in the near term, as it has a moderately positive weighted alpha of 17.99 (as per Barchart.com). This factor and the adverse weather conditions as well as the impact of the Iran war give cues of a further rally.
However, if the greenback strengthens, the wheat fund may underperform. Most soft commodities are priced in U.S. dollars in the global market. Hence, a weaker U.S. dollar is good for commodity investing.
The Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) has added only 0.3% past week and 0.1% over the past month. The moderate strength in the U.S. dollar probably helped the price of WEAT. Additionally, if any hope related to a ceasefire in the Iran war arises, wheat prices may fall from here.
View the Zacks #1 Rank List
Image: Bigstock
Is The Rally in Wheat ETF Overdone?
Key Takeaways
Wheat-based Teucrium Wheat Fund (WEAT - Free Report) has jumped 9.9% over the past month and has added 6.1% over the past week. So far this year, the fund is up about 25%. The fund is up 26.3% from its 52-week low price of $19.78/share.
But for investors seeking momentum, should WEAT be on their radar? Are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea of where it might be headed:
WEAT in Focus
The underlying WHEAT FUTURES looks to reflect the daily changes of a weighted average of the closing prices for 3 futures contracts for wheat that are traded on the CBOT : the second-to-expire contract, the third-to-expire contract and the contract expiring in the Dec. following the expiration month of the third-to-expire contract. The fund charges 100 bps in fees.
Inside the Surge
Wheat prices hit a two-year high last week as traders locked in profits. The Russia-Ukraine conflict showed no signs of easing, with Russian forces resuming strikes on Ukrainian port infrastructure along the Black Sea coast in response to recent Ukrainian attacks on Russian vessels in the Sea of Azov and the Black Sea, per Trading Economics.
Plus, the USDA reported that U.S. wheat net export sales of 235,100 metric tons for the week ended July 9 were below market expectations. U.S. wheat production for the 2026/2027 season is on track to be the lowest since 1972/73. U.S. wheat ending stocks are forecast to be at a three-year low, per USDA.
This drop – representing a roughly 25% year-over-year reduction with a lower yield and harvested-to-planted ratio (per USDA) – is primarily driven by extreme, widespread drought, especially impacting winter wheat crops.
Meanwhile, supply concerns emerged in Australia – the third largest wheat exporter – due to hotter and drier conditions, Trading Economics noted. Investors should also note that the Iran war weighed on exports of fuel and fertilizer.
The sharp rise in fuel and fertilizer prices due to the war in Iran weighed on the seeding plans of farmers in Australia, per producer.com. Many farmers are deciding to plant less wheat and spread less fertilizer.
Plus, a dry growing season in Australia could also reduce the country's grain shipments by as much as 10 million tonnes in the upcoming season, equivalent to about 5% of annual global exports, per producer.com.
Can the Rally Last?
The fund might continue its strong performance in the near term, as it has a moderately positive weighted alpha of 17.99 (as per Barchart.com). This factor and the adverse weather conditions as well as the impact of the Iran war give cues of a further rally.
However, if the greenback strengthens, the wheat fund may underperform. Most soft commodities are priced in U.S. dollars in the global market. Hence, a weaker U.S. dollar is good for commodity investing.
The Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) has added only 0.3% past week and 0.1% over the past month. The moderate strength in the U.S. dollar probably helped the price of WEAT. Additionally, if any hope related to a ceasefire in the Iran war arises, wheat prices may fall from here.