This week saw large rallies in both the wheat and corn futures markets. Wheat traders pushed prices higher Wednesday on speculation that persistent wet weather may delay harvests and ultimately hurt yields and quality.

Delayed harvests risk crop damage from lower yield weights, pest damage and disease.

While most winter wheat is not quite ready for harvest, early damage from the April freeze has already pushed harvest back a few days. This bullish news was followed by an announcement from Ukraine that it would be halting all exports of wheat from the current growing year.

Though not explicit in the announcement, most traders took this as a sign that the Ukrainian harvest will be diminished on account of persistent dry weather, which is a bullish sign for wheat.

Both of these pieces of information were bullish for wheat prices on Wednesday with prices on the July wheat contract closing up more than 4 percent on the day. This buying carried over into Thursday when traders pushed wheat prices up another 1.2 percent on the day.

Should U.S. supplies of wheat dwindle due to lower than expected yields for winter wheat or a poor growing season for spring wheat, the loss of Ukrainian imports could have a dramatic impact on wheat ending stocks and hence prices later in the year.

CORN: Corn rallied this week off of recent lows after some extended-range weather forecast models showed a possibility of a high pressure ridge developing over the Midwest during the month of June.

The possibility of this high pressure ridge, typically associated with warm, dry weather, caused speculators to push prices on the July corn contract higher by almost 5 percent on Wednesday and another 2 percent on Thursday on speculation that it could be the start of a period of drought. However, the possibility of such an occurrence is impossible to predict so far in advance.

It was interesting to note that the July contract rallied much more than the December corn contract because the corn represented by the July contract is already harvested and in storage, and hence not affected by the weather at all. This would seem to say that most of the buying was from speculators looking for contracts with the largest open interest and liquidity, rather than farmers or commercial corn buyers.

Another reason for the rally may be due to the fact that corn prices had been depressed in recent days after the Department of Agriculture had reported better than average corn planting progress and corn condition ratings. Speculators may have been unwinding some short positions that they had held as a result of these bearish of Agriculture reports.

GASOLINE: Gasoline futures plunged on Tuesday on several pieces of bearish news and some short covering.

First, Nigeria installed a new president over the weekend without any violent incidences, an event that some believe is a sign that infighting and energy infrastructure sabotage may soon subside. This helped to ease some supply worries for oil.

At the same time, the U.S. and Iran held seemingly positive bilateral talks over the weekend, an event that had not occurred for several years. This eased traders' fears about a possibly military incursion with Iran and was bearish for gasoline prices.

Also, gasoline stocks have consistently been building over the past 3 weeks and many traders may have been exiting their previously short positions on the belief that the U.S. market may be adequately supplied for the summer driving season.

Walt Breitinger is vice president of commodities at A.G. Edwards and Sons. He can be reached at (219) 738-6460.