Wheat Falling Back Early on Monday

Wheat futures are trading lower this morning after a rally on Friday across all three exchanges; Chicago SRW and Kansas City HRW futures closed up 17-18 cents, while Minneapolis spring wheat rose 13-14 cents. Managed money reduced their net short positions in Chicago and Kansas City wheat, according to weekly CFTC data. Initial 2025/26 export commitments are strong, exceeding the 5-year average, and the French soft wheat crop condition improved slightly to 70% good/excellent.

Analysis

Wheat futures are retreating on Monday morning, with contracts observing losses of 3 to 7 cents, following a notable rally across the three main exchanges on the previous Friday. Specifically, Chicago SRW and Kansas City HRW futures surged by 17 to 18 cents, while Minneapolis spring wheat futures advanced 13 to 14 cents on Friday. Despite these gains, July Chicago wheat contracts experienced a net decline over the week, and open interest fell by 10,592 contracts in Chicago and 4,046 contracts in Kansas City on Friday, potentially indicating profit-taking or position adjustments. Concurrently, weekly CFTC data showed managed money reducing their net short positions in both Chicago wheat (by 6,561 contracts to a net short of 94,011) and Kansas City wheat (by 3,064 contracts to a net short of 74,964 by June 10th), suggesting a slight easing of bearish sentiment among speculative traders. Furthermore, USDA Export Sales data revealed robust early 2025/26 commitments at 5.191 million metric tons (MMT), the highest for the first week of a marketing year since 2019/20, representing 26.4% of the USDA's annual projection and surpassing the five-year average of 24%. On the supply side, the condition of the French soft wheat crop marginally improved, with FranceAgriMer rating it 70% good/excellent, a 1-point increase week-over-week, which could subtly alleviate European supply concerns.

Key Decisions for Investors

• Investors should monitor whether the reduction in managed money net short positions and strong early export commitments translate into sustained buying interest, potentially signaling a shift in market sentiment.
• Given the immediate price pullback on Monday and the decrease in open interest on Friday, it may be prudent to await further price confirmation and volume before significantly increasing long exposure, as this could indicate short covering rather than new bullish conviction.
• The slight improvement in French wheat crop conditions, alongside ongoing USDA projections, should be factored into global supply assessments, potentially acting as a modest counterweight to bullish price drivers.