Wheat Jumps to Six-Week High as Speculators Cut Bets on Decline

Wheat rose to a six-week high as some speculators reduced bets that prices would decline, after futures capped the biggest weekly rally in two months.

Speculative short positions, or bets prices will fall, outnumbered long positions by 74,286 futures contracts as of April 6, the third most ever, the Commodity Futures Trading Commission said last week. Later today, the agency will release data as of April 13. The number of contracts open on the Chicago Board of Trade fell 1.9 percent during the past four days as speculators reduced positions.

“Each time the market rose this week, we saw a new round of fund buying to cover short positions,” said Shawn McCambridge, the senior grain analyst for Prudential Bache Commodities LLC in Chicago. “The funds are caught short and scrambling to get out of positions.”

Wheat futures for July delivery rose 9.75 cents, or 2 percent, to $5.025 a bushel on the Chicago Board of Trade, after earlier touching $5.035, the highest price since March 5. The 4.9 percent gain this week was the third straight and the biggest since Feb. 12.
Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.

Jeff Wilson
Source: Bloomberg