Wheat prices have shot up 15% in the past month as the cold, dry weather takes its toll on America's farmland. Yet wheat is still about where it was last year at this time and 20% lower than where it was in August 2012. Wheat closed at $7.1575 per bushel on Wednesday.
(Read: Grain mostly higher, livestock mostly lower)
CNBC contributor Andrew Busch, editor and publisher of The Busch Update, says the bad weather has made it difficult for farmers to plant.
"It's been cold and the ground hasn't thawed enough where they're going to get the seedlings in April," says Busch.
But, it's not just cold weather and drought conditions driving up wheat prices. Ukraine is in the midst of a standoff with Russia over the status of Crimea. Ukraine is the world's sixth-largest wheat export, notes Busch. He sees American consumers potentially paying for the difficult weather and difficult situation abroad.
"This will take more of their money away from discretionary spending," says Busch. "But, even within the food space, you'll star to see them gravitate towards store brands away from name brands that are sold by General Mills, for instance, if the prices continue to rise."
Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, believes the charts show that the wheat rally is hitting a critical point, though he is reluctant to rely on technicals too much in this situation.
"Technicians are always reticent to ascribe too much importance to the shorter-term technicals," says Ross, "when we have a situation in an agricultural commodity which is driven by these exogenous factors such as weather, such as Crimea. Ukraine [is] the breadbasket of Europe."
The shaky political climate in Eastern Europe will override many chart patterns, according to Ross. Nevertheless, he sees the $7.15 per bushel level as being a critical resistance point based on price patterns over the past few months.
"In the short-term, probably wouldn't chase it here if I were a trader," says Ross. "But, on the same hand, if you were going to short wheat, you've got to keep a tight leash on that short position because above $7.15, there's not a lot standing in the way."
Busch thinks there's one weapon Russia can use should it feel backed in a corner over its position with Crimea. And that could be the catalyst to push wheat prices even higher.
"We don't know how far these sanctions against Russia are going to go," says Busch. "If they really extend a lot, then Russia can do what they've done in the past, which is shut down wheat exports. That would send the price up significantly."
To see the full discussion on wheat with Busch on the fundamentals and Ross on the technicals, watch the video above.