Wheat Joins the Rally on Friday to Ease Week’s Losses

Wheat futures rallied across all three exchanges on Friday, with Chicago SRW and Kansas City HRW contracts up 17-18 cents and Minneapolis spring wheat up 13-14 cents. CFTC data revealed managed money reduced their net short positions in both Chicago and Kansas City wheat. Early USDA export sales for 2025/26 are strong, exceeding the 5-year average, while the French soft wheat crop rating improved slightly to 70% good/excellent.

Analysis

The wheat complex exhibited a strong rally on Friday across all three major exchanges, with Chicago SRW and Kansas City HRW futures advancing by 17 to 18 cents, and Minneapolis spring wheat futures gaining 13 to 14 cents. Despite this daily surge, some front-month contracts, like July Chicago SRW and Minneapolis spring wheat, still registered net losses for the week, although July Kansas City HRW saw its weekly decline limited. A key driver appears to be a shift in speculative positioning, as weekly CFTC data revealed managed money reduced their substantial net short positions in Chicago wheat by 6,561 contracts to 94,011 and in Kansas City wheat by 3,064 contracts to 74,964. Fundamentally, early U.S. export commitments for the 2025/26 marketing year are robust at 5.191 MMT, representing 26.4% of the USDA's annual projection and surpassing the five-year average of 24%, indicating strong initial demand. Conversely, a marginal improvement in the French soft wheat crop, with ratings up 1 point to 70% good/excellent, provides a slight counterweight on the supply side, though the market on Friday primarily reacted to the bullish positioning and demand signals.

Key Decisions for Investors

• Investors should note the bullish confluence of Friday's price rally, significant short-covering by managed money, and stronger-than-average early export commitments for the 2025/26 marketing year, which collectively suggest potential for continued upward price movement in wheat.
• It may be prudent to monitor subsequent CFTC reports for further reductions in the substantial net short position, as this could fuel additional buying pressure, alongside tracking global weather patterns and crop condition reports which remain key price drivers.
• Given the positive sentiment, particularly for related instruments like the Teucrium Wheat Fund (WEAT), and strong demand indicators, consider evaluating or increasing exposure to wheat, while remaining cognizant that improved European crop conditions, such as in France, could introduce some resistance to price advances.