Global Drought Buoys Wheat Futures

Meteorologist are calling our current drought the worst since 1956 as our domestic grain crops erode and production in other parts of the world also suffer.  Wheat futures spiked to their highest prices in almost four years on global grain production fears.

Forecasters are calling for “little rain” to fall over the Great Plains wheat growing region over the next week-and-a-half, and Australia is bracing for “drier-tan-normal” conditions for the next three months.  Russian farmers are expected to harvest over 4% less wheat than a year earlier.

With conditions in Australia and Russia now matching our drought conditions here in the US, there is real concern over shortages and lower yields for wheat,” said Chris Hildebrand, vice-president of trading at HighGroung Trading Group in Chicago, regarding the current wheat futures situation.  Hildebrand adds, “Couple that with the perceived shortages in soybeans and corn and you have a perfect storm for grains and higher prices.”

Wheat futures‘ up-trend shows no sign of a top, but I need to see some type of pull-back before initiating long positions,  otherwise, the risk is multiplied significantly.  I am watching all grain markets for our next trade, but need to exercise patience in getting there.

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