CROPS

In just five trading sessions during the last week, July Chicago wheat futures moved up a dollar per bushel, a fairly rapid move by most standards.

White wheat in Portland managed a 60-cent move up for August delivery, from about $6.50 per bushel to $7.10 or so in response, suggesting that Chicago's jump was a little exaggerated. Usually the first move up from what now appears to be the seasonal lows takes a little more time to play out, say more like three weeks or a month.

Most years, if climate conditions are average-togood, it is normal about now for crop size projections from various analysts to turn from expanding every week to shrinking. No mystery or conspiracy. The Northern Hemisphere wheat crop matures rapidly and harvest has started in the southern U.S., but the market is called "futures" because it anticipates the future prices of things, often imperfectly. The element that set the stage for the recent swift move was the historically large short (sold) positions that were being held by large trading funds, a fickle group that sometimes attempts to move from one side of the market to the other all at once. When the spark came in the form of reports of Russian crop drought stress, along with warm and dry conditions in the U.S. wheat belt putting an end to crop size expansion, the power of the funds buying back their short positions all at once provided the fuel. Boom, we are back to price levels not seen in Chicago since last September. Enjoy it.

The real fundamental supply and demand balances for crops in the world have not changed enough yet to justify all of that move. There is more to the story to come, though, as June is often a crazy month for wheat markets.

Housekeeping note for wheat market watchers: The Chicago Mercantile Exchange (CME group) has expanded active trading hours for wheat and the other grains. Wheat now trades continuously from 3 p.m. each day to 12 p.m. the next day from Sunday afternoon through Friday noon. The market is electronic and global, although there is still the traditional pit-trade session on weekdays from 7:30 a.m. to 11:15 a.m. Now the only time there are no realtime wheat prices is between noon and 3, Oh Boy!

Crude oil in the month to date has fallen from $106 per barrel to about $91. That's about 14 percent. Local retail gasoline has not yet shown this at the pump, but we should be seeing some easing soon.

The stock market is taking a breather from its steady decline of the month to date, although eight-month-old upward trend lines have been broken in the last week to the downside. Upside potential will probably be limited for a while, and risk remains higher than normal.

Information and opinions contained herein come from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options is substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital.