Wheat Prices Soar to Three-Year High: Analyst Warns of Overbuying

Wheat prices have hit a three-year high, and market analyst Jim Wyckoff is warning that traders may be overdoing it on the upside. According to Barchart.com, December hard red winter wheat futures have recently reached a contract high.

Fundamentally, U.S. wheat sales exports have not been impressive lately, and while geopolitical tensions in the Black Sea and regional droughts have rallied prices, global supplies of wheat are still not uncomfortably tight. Seasonal patterns may also be a potential rally killer for wheat futures.

Wyckoff recommends buying a put option on December hard red winter wheat futures with a downside price objective of $6.75 or below. This option expires on November 20th.