Hard red spring wheat traded at the Minneapolis Grain Exchange (MGEX) hit the unprecedented level of $25 per bushel Monday as the bull market in grain hit hyper drive. MGEX recently received approval from the Commodity Futures Trading Commission (CFTC) to remove price limits on the spot wheat futures contract month commencing the first business day after expiration of non-serial options on the spot month. Monday was the first day the March contract had no limits. March MGEX wheat rallied from its Friday close of $19.25 to $25 on Monday before settling at $24.
Wheat markets in Chicago, Kansas City and Minneapolis all hit limits on Monday as well as several other grain contracts. Joe Victor, grain analyst and vice president at Allendale, attributed the move to speculative interests. Victor says he has heard talk of a squeeze targeting the spring wheat processors who would hold short futures against cash positions.
“Volatility is out of control,” Victor, says. He is recommending traders stay out of the market. “I refuse to make any trade recommendations on wheat (either Chicago, Kansas City or Minneapolis) for March or May because of the extremes in volatility.”
Wheat prices hit their all time record high just above $7 in the second of 2007 and have moved steadily higher.
