July Chicago wheat closed at $7.27/bu. on Friday, the lowest price seen since mid-March. Kansas City July wheat ended the week at $8.69, down from nearly $9.50 just a few weeks ago. Volatility still rules, but there are worries that prices may not rebound as harvest approaches.

In the past, wheat, corn and other commodities have reacted to the volatile oil price market. Devo Capital Management, Pagosa Springs, CO, analyzes petroleum markets and says traders are trying to determine if early May’s break in oil prices started a trend change or was just a correction in a bull market. “Normally when you have a break as significant as we saw, it would be accompanied by a drop in open interest,” Devo says. “Last week we actually saw an increase in open interest. This is usually a sign that the bulls have not started throwing in the towel.”

There have been projections that wheat prices could still swell toward $10. But rainfall over some previously dry production areas and reports of China’s intentions to raise its reserve requirements again have had a negative affect on commodity markets in general, say Kansas City Board of Trade (KCBT) analysts.

The U.S. dollar was trading higher and also pressuring Kansas City wheat futures. University of Illinois’ <i>farmdoc</i> unit summarizes that global wheat production will return to normal following the Russian drought a year ago, which means fewer exports for the U.S. wheat producer. “However, U.S. wheat farmers are having production problems of their own with drought that has reduced yields in the central and southern wheat belts,” <i>farmdoc</i> says. “U.S. production will be down, but there will be sufficient supplies to meet all domestic needs as well as provide some exports.”

So it appears growers who make a crop should look at marketing when there are spikes in wheat prices. More rain will probably drown any rallies. More drought will likely drive prices up. There should be a few more good marketing opportunities on the table. But it’s probably smart not to wait on $10.