The Teucrium Wheat Fund (NYSEARCA:WEAT) briefly climbed today after Russia announced that it will be backing out of the Black Sea grain deal. What’s up with wheat prices and the WEAT exchange-traded fund (ETF) lately?
Well, this morning Russia announced the termination of the Black Sea grain initiative. According to a Kremlin spokesperson, while the deal was cancelled, Russia will return to the arrangement if its demands are met. That will likely include a cease of all alleged Ukrainian provocations and attacks against Russia.
The move to back out of the grain deal comes just days after Ukrainian drones damaged a crucial bridge connecting Russia and the Crimean peninsula, a passage Russia has held since 2014.
If you recall, the Black Sea grain deal was passed in July 2022 as a way to reduce and stabilize world food commodity prices after Russia’s initial invasion of Ukraine. Reasonably so, grain and other food commodities skyrocketed in price on news that two of the largest producers of grain had become entangled in war. Russia and Ukraine are each in the top 10 largest grain makers in the world.
The grain deal permitted the “export of commercial food and fertilizer supplies, including ammonia, from three Ukrainian ports in the Black Sea.” Unfortunately, that part of the world has had to deal with seemingly constant disruptions in grain and crop flows.
WEAT ETF Briefly Jumps on Rising Wheat Prices
As a result of Russia’s announcement, a number of food commodities have increased in price this morning. Indeed, as per the Chicago Board of Trade, soft red winter wheat is up 2.9% to $6.81 per bushel, alongside new crop December corn futures (up 1.4% to $5.21 per bushel) and November soybeans (up 1.1% to $13.86 per bushel).
Strangely enough, however, the Teucrium Wheat Fund — which one might assume is most liable to climb — is actually down heading into the afternoon after briefly climbing earlier today. Indeed, WEAT opened at $6.76 this morning, about 3% over its last closing price of $6.56 per share.
As per Teucrium, the WEAT fund “provides investors an easy way to gain exposure to the price of wheat futures in a brokerage account.” WEAT is down 22% over the past one year, a relatively volatile change for a commodity as (traditionally) plentiful as grain. Grain and oilseed markets in general have suffered with unexpected selloffs this year as supply concerns have ramped up in the face of drought conditions in Canada and the northern United States.
Some global leaders have expressed concerns that Russia’s departure from the Black Sea deal will end up raising the cost of living for millions around the world.
“Today’s decision by the Russian Federation will strike a blow to people in need everywhere,” said António Guterres, United Nations Secretary-General.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
