The cause is persistent dry weather in the territory of the main exporter, Russia, but recently also in the American plains. Add to that the unusually cold weather in Western Europe and forecasts that call for saving rains in southern Russia until early May at the earliest, and the Northern Hemisphere has entered the growing season with a rather wobbly step.
Corn and soybeans, two of America’s main crops, have had limited exposure so far as they are just beginning to sow.
However, rain and cooler temperatures may slow Midwest seeding and further boost prices at this stage, primarily because of funds that will need to be spent covering near-record short positions in the six major U.S.-traded grain and soybean futures.
CBOT wheat futures hit a record high of $1,363 in March 2022. Russia attacked Ukraine, and the conflict between these major producers also affected wheat prices. In the following years, it was born, and so the prices gradually fell by 61 percent within two years.
Prior to last week’s rally, these futures showed signs of stabilization, and a double bottom around $5.25 a bushel followed by a downtrend breakout may indicate further upside.
The current price is $6.10. In the week ending April 16, hedge funds and other speculators held near-record short positions (-544k contracts), split between soybeans (-168k), corn (-280k) and CBOT wheat (-96k).
The author is Saxo Bank’s Chief Commodity Strategist
(Editorially modified)
