Hedge funds turn bullish on wheat after four years amid climate and war risks
Investment funds shift to bullish wheat bets as U.S. drought and Middle East tensions tighten global supply and drive input costs higher.
Hedge funds turned net bullish on wheat for the first time in nearly four years by the end of March 2026, driven by dry weather in the U.S. Plains, ongoing Middle East conflict, and rising concerns over fertilizer and fuel supply disruptions, reshaping global market expectations.
According to official data, long positions exceeded short contracts by 8,641 lots, reversing a bearish trend that had been in place since mid-2022. The shift was fueled by a surge in long positions to 117,375 lots, the highest level in more than six years, while short positions declined to 108,734 lots.
This repositioning signals a broader change in market sentiment, moving away from previous oversupply concerns toward a more uncertain outlook.
Weather risks and geopolitics drive price support
Wheat markets are being supported by a combination of persistent dryness across the U.S. Plains, threatening crop yields in a key production region, and escalating geopolitical tensions.
The Middle East conflict, now entering its sixth week, has disrupted energy infrastructure and affected flows through the Strait of Hormuz, a critical corridor for global trade. These disruptions have driven up fuel and fertilizer costs, increasing pressure on agricultural production worldwide.
As a result, farmers globally are rushing to secure inputs and, in some cases, adjusting planting decisions toward less input-intensive crops.
Although wheat prices reached a one-year high in March, they have recently pulled back due to expected rainfall in parts of the U.S. and profit-taking. However, the market remains highly volatile, with weather and geopolitics acting as key price drivers.
