Hedge funds are net bullish on wheat for the first time in four years, betting on droughts and Middle East conflicts triggering fertilizer and fuel shortages.

LootboxPhobia · 2026-04-06T06:57:50+00:00

Hedge funds have turned net bullish on wheat for the first time, driven by fertilizer and fuel shortages caused by drought in the United States and the Middle East war. Chicago wheat futures long positions hit a six-year high, with the market concerned about food security. Although wheat prices rose at one point, they retreated due to rainfall forecasts and profit-taking.

LootboxPhobia

2026-04-06 06:57:50

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Zhitong Finance APP learned that hedge funds turned net bullish on wheat for the first time in nearly four years, betting that shortages of fertilizer and fuel caused by U.S. drought conditions and the war in the Middle East will push wheat prices higher.

According to weekly data released by the U.S. Commodity Futures Trading Commission (CFTC) last Friday, for the week ending March 31, the Chicago wheat futures net long position was 8,641 contracts, meaning long positions exceeded short positions. This reversed the net short positioning pattern that had been in place since June 2022.

CFTC data shows that this shift was mainly driven by a surge in long positions. During the week, long positions rose to 117,375 contracts, the highest level in more than six years; short positions fell to 108,734 contracts.

The war between the U.S. and Iran has now entered its sixth week. The conflict has caused severe damage to energy infrastructure in the Middle East and disrupted the transport of fuel and fertilizer through the Strait of Hormuz (a key shipping lane connecting the Persian Gulf with global markets).

Farmers around the world are rushing to secure supplies of critical agricultural inputs, and some farmers have shifted to growing crops that rely less on fertilizer. The supply disruptions triggered by the war have heightened concerns about food security and completely reversed the market sentiment for agricultural products that had been under pressure previously due to ample supply. In March, wheat prices at one point touched the highest level in a year, before later giving back some of the gains.

Ongoing drought in the U.S. Great Plains also supports wheat prices. This region is a key wheat producing area, and the drought threatens output. However, according to the U.S. Weather Forecast Center’s forecast, some areas may see rainfall this week. The latest rainfall outlook and some profit-taking positions led to a decline in wheat prices on Monday.

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