For the first time in nearly four years, hedge funds have gone net long on wheat, betting on rising prices

Long positions in Chicago wheat exceeded short contracts by 8,641 for the week ending March 31, according to weekly data released Friday by the U.S. Commodity Futures Trading Commission. This restored the net short position that had been in place since June 2022.

The U.S.-Israeli war with Iran, now in its sixth week, has severely damaged energy infrastructure in the Middle East and disrupted fuel and fertilizer supplies through the Strait of Hormuz, which links the Persian Gulf to global markets.

Farmers around the world are scrambling to secure essential inputs and, in some cases, are switching to crops that are less reliant on nutrients. War-related disruptions are raising concerns about food security and have shifted sentiment in agricultural markets, which had previously been under pressure due to abundant supply. In March, wheat prices reached their highest level in a year, after which they began to decline.

Wheat prices were also supported by a prolonged drought in the US Plains, which threatened production in a key growing region. However, according to the US Weather Prediction Center, rain was expected in some areas this week. The latest forecast, along with some profit-taking, contributed to a decline in prices on Monday.

Tags: prices, wheat