Wheat Continues Mixed Trade on Thursday Morning

Wheat futures exhibited mixed performance, with Chicago SRW contracts declining on net new selling interest while Kansas City futures posted gains due to short covering. A key market development was Sovecon's substantial upward revision of 2025/26 Russian wheat export estimates to 43.3 MMT and production to 83.6 MMT, signaling increased global supply. Market participants also await Thursday's US export sales data.

Analysis

The wheat futures market is exhibiting significant divergence, with Chicago (SRW) and Kansas City (KC) contracts moving in opposite directions. Chicago futures experienced declines of 5 to 6 cents, driven by net new selling as indicated by a 9,946 contract increase in preliminary open interest, signaling bearish sentiment. Conversely, KC futures gained 2 to 4 cents, supported by short covering, with open interest falling by 1,879 contracts. This technical divergence is set against a fundamentally bearish global supply outlook. Sovecon significantly raised its 2025/26 Russian wheat export forecast to 43.3 MMT from 38.3 MMT, a material increase that points to greater supply from a key global producer. The market is also awaiting the U.S. Export Sales report, with expectations for the week ending July 24 ranging from 300,000 to 700,000 MT, which will provide a near-term demand signal. The announcement of a U.S.-South Korea trade deal introduces a macro trade policy element, though its direct impact on wheat is not specified.

Key Decisions for Investors

• Consider the divergence between wheat contracts for potential spread trades, such as long KCBT versus short CBOT, to capitalize on the opposing technical momentum driven by short covering and new selling, respectively.
• Investors with long exposure should exercise caution, as the substantial upward revision to Russia's export forecast introduces a significant bearish headwind for global wheat prices, potentially capping rallies and pressuring the complex lower.
• Monitor the upcoming U.S. Export Sales report closely, as a result towards the high end of the 300k-700k MT estimate could provide temporary support, while a number below expectations would likely amplify the bearish sentiment from the increased Russian supply outlook.