Nasty Weather Triggers Short Covering (and a Short Rally) in Wheat Market

The wheat market rallied earlier this week after parts of the U.S. hard red winter wheat crop were pummelled by nasty weather.

A blanket of snow fell on ripening wheat in parts of Kansas, Colorado, Oklahoma and Nebraska. Heavy rains have also caused flooding from Oklahoma to Indiana.

“There certainly is some damage in the hard red winter wheat crop, but what added the gasoline to the fire is the funds were so heavily short the wheat market, in pretty much all ag markets,” explains Jon Driedger of FarmLink Marketing Solutions in the interview below.

Jon Driedger

But against a backdrop of heavy world wheat supplies, it’s hardly a bullish story for the market, he notes.

“It’s an excuse for the funds to get a little nervous, cover some shorts and give us a little run.”

While seeding has started in parts of Western Canada, many areas are still dealing with excess moisture and unharvested 2016 crop. Seeding plans haven’t changed in most cases, but they could if there’s another setback with the weather, he says.

Driedger joined RealAg Radio on Tuesday to discuss the rally in the wheat market, weather concerns and market responses, seeding progress on the prairies and the recent slide in the Canadian dollar:

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