Wheat Hedging

Published on: 11:20AM Apr 23, 2010
 When to sell futures against you crops is always a difficult decision. In general, you would rather sell into a rising market than a falling market, but that, too, is a tricky analysis. The one thing you can be sure of is that you don’t want to be selling when the commercial traders are convinced the market is going up.


Commercials are long 350 million bushels in Chicago, long 2 million bushels in Kansas City and short 1.75 million bushels in Minneapolis. I think this says wheat prices are going up. Large funds have the other side of the action except in Kansas City where they, too, are long. That suggests anyone who would like to speculate a little should give serious consideration to being long Kansas City wheat.


I might add that in the arenas where commercials are long, the open interest has been rising. As prices rise, expect to see commercials cover their positions gradually, subtracting from the total open interest.


It is too early to hedge your crops, by at least a dollar/bushel; and we’ll all hope for prices to rise more than that.