HFs May Find Another Way To Make Bread

Now that it looks as if hedge funds may be retreating from crude oil, what’s next in commodities? Some folks are hedging their bets on wheat, as weird weather worldwide has wreaked havoc on the food staple. Reuters reports that major producers of all varieties of grain—particularly the human-consumption quality – have all suffered crop shortfalls as a result of hot, dry summer around the globe. Australia, for example, is bracing for a one-third decline in production, while others expect somewhat smaller percentage drops as demand grows. That could raise prices to levels not seen in years, and while there is enough stockpiled for now, “It is going to be year of tight supplies,” Mark Samson, v.p. of South Asia of the U.S. Wheat Associates told Reuters. :”And with expectations of high world prices, more hedge funds are increasingly paying attention to this market.” Already, the Deutsche Bank Fund has 22.5% of its investment funds in wheat and corn trading, says Reuters. At this point, U.S. wheat exporters are not lowering their prices despite sufficient grain, as they wait to see how bad the crop in the rest of the world turns out – and then raise prices as supplies tighten.