When a drought in Russia led the country to temporarily halt wheat exports on Aug. 5, wheat prices went through the roof, hitting a 23-month high and settling limit up for the first time since August 2008 at the Chicago Board of Trade.
Shawn Hackett, president of Hackett Financial Advisors, says weather in Russia will be key to the direction of wheat prices in September. “If the dry weather and drought pattern persists, it would dramatically reduce or prevent [Russia] from planting the amount of acres they need. That would create an additional catalyst for a higher level. It’s too early to say whether that’s going to take place or not,” he says. “If the weather cooperates, wheat prices are going to stay in a sideways trading pattern. Unless there’s another real jolt from Mother Nature, we’ll probably trade in a trading range in September between 6 ½ to 7 1/2 dollars a bushel.”
Darin Newsom, senior analyst, Telvent DTN, says, “Much of what we saw was due to the non-commercial side of the market. The CFTC report shows an incredible build in positions. The bulk of the buying came from that group and with the market a bit overpriced now, they may turn their attention to other markets until the actual fundamentals of the market begin to reflect the problems.” He expects wheat to come under pressure in September, going down to the $5.60-$6.30 range by mid-September.