Wheat Sees Mixed Trade, with Spring Contracts Rallying

Wheat futures closed with mixed results, as Chicago SRW was steady to lower, Kansas City HRW saw slight gains, and Minneapolis spring wheat increased. Weekly export sales showed net reductions of 128,797 MT for 2024/25 wheat, while new crop sales totaled 711,368 MT, a three-week low, with unknown destinations leading purchases. CFTC data indicated managed money reduced net short positions in Chicago and Kansas City wheat futures, and FranceAgriMer reported a slight decline in the good/excellent rating for the French soft wheat crop to 70%.

Analysis

Wheat markets exhibited divergent behavior at the close of Friday's trade, with Chicago SRW futures ending steady to 2 cents lower, while Kansas City HRW contracts registered modest gains of 1 to 2 cents. Conversely, Minneapolis spring wheat futures continued their upward trajectory, posting gains of 9 to 10 cents, marking a 9-cent increase for July contracts over the week. Export sales data presented a mixed picture: the 2024/25 marketing year saw net reductions of 128,797 metric tons (MT), within the anticipated range of net reductions of 200,000 MT to sales of 100,000 MT. New crop sales, however, reached 711,368 MT, a figure at the higher end of estimates (300,000 to 800,000 MT) but still representing a three-week low; key buyers included unknown destinations (213,000 MT), Mexico (140,000 MT), and South Korea (115,000 MT). CFTC data as of May 27th indicated a shift in speculative positioning, with managed money reducing their net short position in Chicago wheat by 7,667 contracts to 101,226 contracts, and trimming their Kansas City net short by 801 contracts to 79,361 contracts. Adding to supply-side concerns, FranceAgriMer reported a slight deterioration in the French soft wheat crop condition, with 70% rated good/excellent, down from 71% the previous week. This combination of factors—diverging price action across wheat types, lower new crop export sales despite being within estimates, reduced bearish bets by managed money, and a slight decline in French crop quality—suggests a market balancing multiple, somewhat conflicting, signals.

Key Decisions for Investors

• Investors should note the divergence between spring wheat strength and winter wheat's mixed performance, potentially indicating relative value opportunities or differing regional supply/demand dynamics.
• The reduction in managed money net short positions could signal a potential bottoming process or reduced selling pressure, warranting close monitoring of subsequent CFTC reports for confirmation of this trend.
• Given the three-week low in new crop export sales and slight deterioration in French crop conditions, investors should remain cautious about upside potential until stronger demand signals or more significant supply disruptions emerge.