Archer Daniels Midland, CF Industries and Mosaic led an early rally among agricultural and fertilizer stocks on Monday as a potential halt of wheat exports from India threatened to exacerbate a global food crisis.
Wheat prices surged to 14-year highs on Monday after India's Commerce Ministry announced a wheat export ban late Friday. India later clarified it may continue to allow exports to some neighboring countries, but that will require government approval and depends on availability.
India's grain reserves had been seen as a partial solution to a grim supply outlook amid Russia's invasion of Ukraine, with Prime Minister Nardendra Modi saying his country would step up to help fill the gap. But that supply has been jeopardized by a heatwave in India that has slashed production estimates.
The wheat futures price jumped nearly 7% to $12.47 a bushel, while corn grew 1.9% to $8.09 a bushel. The Tecrium Wheat Fund ETF, an IBD SwingTrader issue, rallied 4.3%.
Grain processor ADM rose 2.1% and Bunge gained 2.7%.
Among fertilizer plays, CF stock darted up 3%, Mosaic 1.3% and Nutrien 2.4%.
Since wheat and corn are in many instances substitutable, a higher price for one creates more demand for the other. Nitrogen fertilizer is a key input for growing both corn and wheat.
CF Industries, which was featured as Friday's IBD Stock Of The Day, kept up momentum in Monday stock market action after its break above a key trend line offered a buy signal for aggressive investors. CF also is on the flagship IBD 50 list of elite stocks.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the stock market trend and what it means for your trading decisions.
The Group of Seven leading economies warned on Saturday that Russia's offensive in Ukraine could cause famine for more than 50 million people in Africa and the Middle East. Ukrainian grain exports have been halted by fighting and blockades in the Black Sea.
