Wheat futures rally as conditions shift

Several weeks ago, we talked about both world and U.S. wheat prices being at multiyear lows and some of the factors that got them there. 

Well, let this be a lesson in how quickly things can change in ag futures markets, as this week we’re going to discuss the factors that have gotten spot Chicago wheat futures back near their highest levels of the calendar year and why they’re some 70-plus cents off their lows.

Several reasons exist for the relatively quick turnaround, both domestic and global.

One of the main reasons is something we’ve touched on in the past, and that is short-covering by managed money fund traders. Funds have been net-short wheat futures since fall 2022, with their largest position totaling nearly 130,000 contracts in spring...