(Bloomberg) -- Traders in a little-known corner of the crop markets just lapped the world with a rally that beat gains for all other major asset classes in June.
Spring wheat, traded on the Minneapolis Grain Exchange, has soared 32 percent in June after a drought hurt crops in the northern U.S. Great Plains. That was a better performance than 80 other commodities tracked by Bloomberg and also topped the biggest moves for currencies along with major global bond and equity indices. You have to go to another overlooked market to find a larger return: the Caracas Stock Exchange’s IBC Index jumped about 63 percent, but those gains are a bit of an illusion because of Venezuela’s plunging currency.
While it’s a thin market, there were some smart speculators who got a piece of the spring-wheat action. Hedge funds boosted their net-long positions -- the difference between bets on a price increase and wagers on a decline -- for four straight weeks. As of June 20, the holdings were at a four-month high of 12,720 futures and options, U.S. Commodity Futures Trading Commission data show.
On Friday, spring wheat for September delivery climbed 1.9 percent to $7.535 a bushel at 9:31 a.m. local time on the Minneapolis Grain Exchange. Prices are trading near a three-year high.
The northern U.S. has been plagued by dryness this year, and conditions for the domestic spring-wheat crop are their worst for this time since 1988. On Thursday, Canada cut its outlook for the total wheat acreage more than analysts expected, further boosting supply concerns.
The spring-wheat crop is valued for its high protein content, which is associated with higher levels of gluten -- the element that gives dough its strength and stretch.