Rain in the Heartland Drives Wheat Prices to a Record Decline

(Bloomberg) -- The heaviest rain in months in parched Kansas, the biggest U.S. grower of winter wheat, sent the grain price tumbling by a record 5.9 percent on speculation that the downpour will revive crops.

Hard red winter wheat futures for May delivery tumbled as as 30 cents, the most allowed by the Chicago Board of Trade, before closing at $4.7025 a bushel. Futures breached the 50- and 200-day moving averages, triggering sales by hedge funds racing to unwind bullish bets, Darrell Holaday, the president of Advance Market Concepts in Wamego, Kansas, said in a telephone interview.

In the week ended March 13, speculators increased wagers on rising prices to 28,946 futures and options contracts, the highest since Aug. 15, government data showed March 16. Funds had a net-short position of 34,422 contracts at the end of December. May futures began trading in July 2015. The percentage drop was the biggest for a most-active contract since March 28, 2013.

“The rain came at a good time for the crop to begin to recover from drought,” Holaday said. “This break in prices should help to improve export demand” by sending the grain to competitive levels on the world market, he said.

The center of the Kansas wheat belt had widespread rain in the past 24 hours with lingering showers on Monday adding beneficial moisture to central and eastern areas, Andy Karst, a meteorologist at World Weather Inc. in Overland Park, Kansas, said in a phone interview.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net.

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Patrick McKiernan, Millie Munshi

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