Wheat Starting Friday with Mixed Trade

Wheat futures saw gains across major exchanges on Thursday, fueled by short covering and a broader commodity market rally, though trade is mixed Friday morning with spring wheat slipping. This comes as the International Grains Council forecasts an increase in 2025/26 world wheat production to 827 MMT and stocks to 275 MMT, while Turkey notably revised down its 2025 production estimate by 1.7 MMT to 17.9 MMT.

Analysis

Wheat futures experienced notable gains across major exchanges on Thursday, with CBT soft red wheat, KC HRW, and MPLS spring wheat contracts rising 8-12 cents. This upward movement was primarily driven by significant short covering, evidenced by preliminary open interest declines of 2,372 contracts in CBT and 2,286 contracts in KC markets, alongside general support from a broader commodity rally, including crude oil. However, trade turned mixed on Friday morning, with spring wheat futures showing a slight slip, indicating potential short-term volatility.

The International Grains Council (IGC) projects an increase in 2025/26 world wheat production by 8 MMT to 827 MMT, with global stocks also rising by 5 MMT to 275 MMT, despite a 3 MMT reduction in old crop stocks. Concurrently, trade and consumption are both forecast up by 1 MMT. These figures suggest a generally improving global supply outlook, which could exert long-term pressure on prices.

Conversely, regional supply estimates present a mixed picture; Turkey revised its 2025 wheat production estimate down by 1.7 MMT to 17.9 MMT, a notable reduction. Meanwhile, France's wheat crop planting progressed significantly, reaching 57% as of October 20, a 30-point increase on the week, signaling favorable conditions for the upcoming harvest in a key European producer. This combination of technical short covering, broader commodity strength, and conflicting supply forecasts contributes to the current mixed sentiment.

Key Decisions for Investors

• Investors should monitor the sustainability of short covering activity and broader commodity market trends, as these technical factors are currently driving short-term wheat price movements.
• Evaluate the long-term implications of the IGC's increased global production and stock forecasts, which suggest potential bearish pressure, while also considering localized supply shocks like Turkey's revised estimate.
• Pay close attention to upcoming crop condition reports from major producing regions, such as France's planting progress, to assess future supply dynamics and potential price volatility.