Wheat Sticking Close to Unchanged Early on Thursday

Wheat futures are trading near steady after overnight weakness, following Wednesday's gains across Chicago SRW, Kansas City HRW, and Minneapolis spring wheat exchanges, with gains ranging from 3 to 7 cents. Export Sales data is expected to show 2024/25 wheat business in a range of net reductions of 200,000 MT and sales of 100,000 MT, while SovEcon raised its 2025 Russian wheat crop estimate to 81 MMT, slightly above its previous forecast but below last year's figure; the USDA estimates 83 MMT.

Analysis

Wheat futures are exhibiting near-steady trading conditions following overnight weakness, which pared back some of the gains observed across the three main exchanges in the previous session. On Wednesday, Chicago SRW futures closed 3 to 4 cents higher, with a significant decrease in preliminary open interest by 10,082 contracts suggesting short covering activity. Kansas City HRW futures also saw gains of 4 to 5 cents, accompanied by a smaller reduction in open interest of 963 contracts. Minneapolis spring wheat futures led the gains, rising 6 to 7 cents. The immediate weather outlook presents a mixed scenario: limited precipitation is forecast for much of the western Southern Plains, potentially impacting HRW wheat, while some SRW areas are expected to receive more moisture. Market participants are anticipating Thursday's Export Sales data, with expectations for 2024/25 old crop business ranging from net reductions of 200,000 metric tons (MT) to net sales of 100,000 MT, and new crop sales projected between 300,000 MT and 700,000 MT, indicating considerable uncertainty. On the global supply front, SovEcon has revised its 2025 Russian wheat crop estimate upwards by 1.3 MMT to 81 MMT, though this remains below their estimate for the prior year (82.6 MMT) and the USDA's current projection of 83 MMT. For instance, Jul 25 CBOT Wheat, after closing up 3 1/4 cents at $5.49 1/4, was subsequently trading down 1 3/4 cents, reflecting the cautious sentiment.

Key Decisions for Investors

• Investors should closely monitor the upcoming Export Sales report, as the wide range of expectations for both old and new crop sales could introduce significant short-term price volatility.
• Pay close attention to evolving weather conditions in key U.S. wheat-growing regions, particularly precipitation levels in the Southern Plains for HRW and moisture patterns in SRW areas, as these will influence yield outlooks.
• Continue to track Russian wheat crop estimates from various sources like SovEcon and the USDA, as discrepancies and revisions can materially impact global supply perceptions and price trends.
• Given the evidence of short covering in SRW contracts alongside recent price gains, but also prevailing overnight weakness and mixed fundamental signals, traders should carefully assess whether current levels indicate a durable price floor or a temporary consolidation before committing to new positions.