Wheat Futures Advance as Investors Unwind Bets on Price Slump

Wheat prices posted the biggest gain in almost five weeks as some hedge funds and traders unwound near-record bets on a price slump. Speculative short positions, or wagers on declining prices, more than doubled in the first quarter, Commodity Futures Trading Commission data show. So-called net-shorts were 56,716 contracts in the week ended March 30, compared with a record 60,457 on Feb. 9.

“The market is so short that any type of bullish news could shoot the market higher,” said Jamey Kohake, a broker at Paragon Investments in Silver Lake, Kansas. “Guys are scared on how everybody’s bearish. Nobody wants to see an 80-cent gain on short-covering. We’re sitting here nearly record short, and at any time the funds could say ‘we’ve made our money.’”

Wheat futures for July delivery rose 10 cents, or 2.1 percent, to $4.7725 a bushel on the Chicago Board of Trade, the biggest gain for a most-active contract since March 3. The grain has dropped 12 percent this year.

Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.

Tony C. Dreibus
Source: Bloomberg