Wheat headed for test of Mid- April low on loss of 61.8% level

Odds are front month Wheat will test the Mid-April low before they try another leg higher. With the loss of the 61.8% retracement of the mid-April to June 1 rally this week, odds jump that a full retracement will take place down near the 511 level.

That said, there is now talk in the market of hedge funds set up to accumulate grains on the notion that the U.S. economy will suffer a significant bout of inflation by Christmas. One $6bln fund is said to have already started accumulating both futures and options positions on the inflation notion.