Wheat Rises to Seven-Week High as Speculators Unwind Short Bets

Wheat rose to a seven-week high, extending this month’s rally, on signs that speculators are unwinding bets on lower prices by buying back futures contracts.

Net-short positions, or bets prices will fall, were at the second-lowest level since 2005 this month, and speculators may be exiting those holdings after wheat slipped to a six-month low on April 5. Since then, the price is up 9.4 percent. “We made new daily highs, and that triggered some stops, then we got above last night’s highs, and then moved above last week, and that triggered some more buys,” said Larry Glenn, an analyst at Frontier Ag in Quinter, Kansas. “We do have a seasonal tendency to rally this time of year, but usually it’s off some sort of weather scare.”

Wheat futures for July delivery rose 11.25 cents, or 2.3 percent, to $5.11 a bushel on the Chicago Board of Trade, after touching $5.12, the highest price for a most-active contract since March 4. Wheat still is down 3.2 percent from a year earlier because of reduced demand for U.S. grain and rising global stockpiles.

Speculative short positions outnumbered long positions by 50,655 contracts in Chicago as of April 13, compared with 56,716 contracts two weeks earlier, which was the most since touching a record of 60,457 contracts in February, U.S. Commodity Futures Trading Commission data show.

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