Wheat was running very discouragingly in the market. It was at the six-month low price and the most tragic part being that the recovery signs were not at all seen. Agro-commodities, on one hand, are those commodities which are not preferred compared to bullions or energy group commodities and on the other hand, most of the time in the year they run with the famine in their prices. In case of bullions or energy group commodities, though their quantity is comparatively low their high value gives the scope of higher profits to the investors but in case of agro-commodities, the lower value leave the scope of lesser profits even though the quantities are higher.

Coming to this point of time, wheat has bounced back from its six-month low on the grounds of expectation that the dry weather prevailing in the biggest exporter of the world, United States of America, will for sure cut back the production. This trend was evidently seen when the prices of wheat for delivery in March rose by 0.7 percent a bushel in the trading platform of Chicago Board of Trade. Earlier prices had rose anticipating the higher supplies by the USA but now the scenario has changed. Drought has been a common reason for the price hike of the Wheat. Last year also, drought in Russia and USA had rushed the prices by almost a 19 percent.

United States of America has been growing most of the winter wheat now the government has said that the dry weather may persist up to March, which is catalyzing the price rise of the wheat. The first probable rain has only been anticipated on January 8 or January 9 as per the weather forecast of the government agency there. Therefore, dryness has developed as a major concern of the farmers, who are worried for lower production, and for the investors, who are happy about the rise in the price of the wheat. Agricultural economists claim that the market has to go through April-May to reach to any comfort level regarding the supply perspective for the wheat commodity. With the adverse conditions prevailing in the country now, there are expectations by the experts that the price of wheat may rise up to 26 percent which will be one of the highest price rises ever seen for the commodity.

Argentina is the largest producer in South America which may also support the wheat price. Here, the agriculture ministry of the country has lowered its production forecast to 10.5 million metric tons from 11.1 million metric tons which also suggests that the exports of the commodity will decrease and the prices go up as a counter.

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.