Hedge Funds Wheat Short Bets

Hedge Fund Wheat Short Bets

Hedge Funds Unwinding Short Bets on Wheat

How hedge funds trade can drastically affect the price of commodities, one example is wheat, the fourth-largest crop in America.  Hedge funds are beginning to unwind their short bets on wheat futures allowing the price to rise.  Prior to this week's rise, wheat prices have fallen 9% this year.
Speculative short positions, which stand to gain on declines in futures, outnumbered long positions by 55,427 contracts in Chicago in the week ended April 6, government data show. The net-short position on Feb. 9 was a record 60,457. Wheat prices have dropped 9 percent this year amid increasing global production and rising stockpiles.
“The market is a technically driven market these days,” said Dewey Strickler, the president of Ag Watch Market Advisers in Nashville, Tennessee. “The trend-following funds are short, and that’s supporting the market.”
Wheat futures for July delivery rose 5.5 cents, or 1.1 percent, to $4.9275 a bushel on the Chicago Board of Trade. The price has gained 2.8 percent this week.  Source

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