Most farmers would be excused for not checking wheat prices very often, given the long-running decline in Illinois wheat acres. Limited production potential combined with low prices equate to profitability challenges.

But when Chicago wheat futures approach the $6-mark, there are reasons to take notice. “We’ve gone up quite a way, largely driven by momentum traders as the algorithms were pushing it higher,” said Arlan Suderman at INTL FCStone in Kansas City. “Fundamentally, we do have some reasons for it, but I think it got a little too far, too fast and getting in an overbought condition.”

For several years, wheat prices have been a millstone on the corn market; wheat may not be a preferred feed source but can prove a useful alternative if corn gets too expensive. Today, the spread between Chicago corn and Chicago wheat contracts is noteworthy, close to $2 per bushel. Suderman says there has been some pullback in wheat feeding during this rally, but the amount is not significant. “Overall, we’re still seeing far more wheat feeding than what USDA is currently reflecting,” he said.

Also worth watching in the wheat market is the timing of these price moves. A January rally indicates worldwide factors have more to do with prices compared with the domestic crop. “We tend to see more of a weather-related rallies, seasonal rallies, as we get into the spring of the year, into March and April,” he said. “Part of that is because then we know a little bit more of what the crop opportunities are in the northern hemisphere. And that’s where the greatest risks are as well.”

There are several factors involved in wheat’s higher move. A horrible growing season in Australia is certainly one. There has been a 10% decline in France, the top European producer, due to wet weather. And French port workers are on strike while demanding pension reform.