There’s nothing like a little volatility before a holiday. A week after touching $7.50 a bushel for only the second time in history, Chicago wheat prices on Friday morning vaulted past $8 — to an all-time high of $8.07-3/4 basis the December contract. Then came the profit-taking to a close of $7.75-1/2.
    Wheat was on the run again all week — all summer for that matter. So cashing in on the rally only made sense to Chicago traders and the hot-money hedge funds before the 3-day summer-ending Labor Day U.S. holiday weekend.
    End-month profit-taking added in some incentives for the big managed funds that have helped power the rally.
    Corn and soybeans in the last week of August again seemed to be hiding behind the glare of wheat’s push to uncharted highs. Advancing corn harvest in the mid-South and reports of big yields — 175 to 200 bushels per acre — in the southern Midwest worked to keep corn prices delinked from wheat gains.
    Soybeans, on the other hand, appeared to be caught between the two grains, looking for a reason to move.
    Beans managed to puncture some technical chart resistance during the week, as benchmark CBOT November prices rose above the 50-day moving average. But traders said the market will need more incentive next week to penetrate key resistance at $9 basis the November, the key harvest hedge contract.
    Reminders of what the CBOT soybean strength will mean for coming South American planting and forward pricing also hung in the background, a restraint on gains.
    The bulls, on the other hand, still seem to be in love with wheat.
    On the fundamental side, tight global wheat stocks and worries that extreme weather conditions in Europe, Argentina, Canada and Australia will cut world wheat supplies further still retain potential to fuel more upside breaks, traders said. Chart-based shortcovering has added to the wildness of such technical breakouts.
    Traders will be watching to see if Australia’s wheat country gets a much-needed weekend drink before CBOT screen trading reopens on Monday night.
    “There was some speculation that there was some improved rain chances for Australia, but there’s still a question about coverage,” one CBOT trader said of wheat acreage moisture.
    Heavy rains could stir some more profit taking in CBOT wheat. But if it’s dry in Australia over the weekend, there’s no reason to believe that wheat couldn’t jump past $8 again and move higher, traders said.
    “Today’s close wasn’t anything more than end-of-the-month, end-of-the-quarter, rebalancing-type positioning,” said the CBOT trader on Friday afternoon. “I don’t think people are getting too worked up and saying the high is in.”
    One clear trend seen as wheat rallied the past week is a decline in open interest.
    Many believed that drop could be attributed to big speculators and professional grain traders being blown out of “contrarian” wheat/corn spreads they had put on as the price difference between the two grains — $4 to $5 in the nearby contract months — defied historical trends of $1-2 a bushel. 
    Those speculators that had sold wheat and bought corn in a counter to that differential, betting that the spread would narrow — and exiting the market to stop losses in the face of wheat’s continued push into uncharted heights.