Mercantile says wheat has benefitted fund-led short covering, but now will watch corn, where funds are still near record short and long-term moving averages have been broken. According to Mercantile, wheat has become expensive vs. corn, so any further strength in corn could provide the next wave of support to wheat prices.

Funds are now long MATIF, which is a partly a reflection of the smaller W EU crops and the risk of a smaller Russian crop. Mercantile says the challenge is that Russia is the most aggressive new crop seller, and they may well raise the reference price to lower the export tax.