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Wheat futures ready for a freefall

An ag economist says wheat futures could freefall at any time.

The University of Missouri’s Ben Brown said wheat is trading above market fundamentals, receiving bullish signals from a short squeeze which he compares to Game Stop’s stock in 2020.

“We saw shares of GameStop go from like $20 a share to over $450 a share within a really short period of time,” he said. “And we’re seeing that same situation play out in the wheat market.”

Brown said traders sold wheat contracts expecting the market to go lower, but Russia’s invasion of Ukraine drove up prices. He tells Brownfield now those traders must buy back wheat contracts before they go into delivery at the end of the month.

“We’ve got what I would call a broken market at the moment,” Brown said. “And certainly, it’s not based on fundamentals and the risks to the wheat market is it’s going to continue to go higher until the last short is out of the market. When that happens, there’s really no fundamentals under this market and it’s going to come crashing down.”

Brown said it wouldn’t be surprising to see nearby wheat contracts trading limit up and down until they expire. Brown made his comments on this week’s Weekly Commodity Market Update.

  • good day , I would say that Brown is not completely wrong but upside potential is more probable then downside in this environment , rgrds fabrizio fm Italy ( Finagrit group)

    • March 8 seemed to be the high in the market. We’ve lost four dollars per bushel in the May wheat contract since then.

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