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A Market Mystery: The “Wheat Whale” That Came Out of Nowhere


Yet it is undeniable that retail investors have played a role.

Amateur investors, many of whom have embraced trading during the pandemic, have become a force in the markets. Many of them gather on Reddit discussion forums to discuss trading tips and strategies. Early last month, the Teucrium wheat ETF became a trending topic.

On March 7, a Reddit user with the handle “quarantrader” suggested that the price of the ETF, which would peak that day, could go much higher. The author of the article argued that the conflict in Ukraine will keep world wheat prices high for a long time. “I wouldn’t be surprised if we got at least $20. If you told me $40 by July, I wouldn’t even blink.

The next day, another user, TerabyteFury, observed that “Wheat” as a whole was “trading at ever-higher prices and experiencing significant retail volume from people like us.”

Whether or not an increase in retail silver in the Teucrium ETF caused Chicago contracts to stall, there is no doubt that the ETF’s popularity has skyrocketed. On March 9, the SEC cleared Teucrium to issue more shares. He is now allowed to add an indefinite number without first seeking SEC approval.

The surge in futures prices on the Chicago Mercantile Exchange came to a halt after wheat prices began to fall in other regions. But the Teucrium ETF’s daily trading volume since the price spike has hovered between a high of just under 10 million shares on March 17 and a low of less than two million on Monday.

Andrey Sizov, a Russia-based grain analyst, said in an interview that Teucrium’s buying frenzy was just one part of a much bigger picture – one where speculative investors, like hedge funds, who had bet that wheat prices would fall were caught off guard. -guarded by war and rushed to buy new futures to minimize their losses.

But Mr Sizov added that the fireworks in early March had a useful purpose. Much of the bad news that could emerge in the coming months regarding Ukraine’s ability to export wheat is likely already priced into wheat prices, he said. Additionally, the initial price spike has led the United States and other governments to begin planning how to deal with what will likely be a sharp drop in wheat supply from Ukraine this year.

“It’s not really as bad as it might sound if you only read the headlines,” Mr Sizov said.

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