Key Moments
- Wheat futures contracts are trading 2 to 7 cents lower early Tuesday, pressured by a sharp decline in crude oil prices.
- Managed money reduced net long positions in Chicago Board of Trade and Kansas City wheat futures and options as of 5/19.
- Old crop U.S. wheat export commitments reached 25.241 MMT, or 102% of the USDA forecast, while new crop sales are significantly behind last year.
Energy Market Pressure and Early Tuesday Trade
Wheat futures are extending their decline early Tuesday, with contracts down between 2 and 7 cents as the market reacts to weakness in crude oil. Crude oil is trading $3.85 below Friday’s level, as the United States and Iran were reported to be moving closer to a deal over the weekend, although no agreement had been finalized as of Tuesday morning. The downturn in energy prices is acting as a headwind for the wheat complex.
Friday’s Futures Performance Across Major Wheat Contracts
On Friday, wheat futures recovered from intraday lows but still finished the session lower across the three primary U.S. markets.
Chicago soft red winter (SRW) wheat futures on the CBOT ended Friday’s session from unchanged to 1 3/4 cents lower, with the July contract down 10 1/2 cents for the week. Open interest in Chicago wheat increased by 3,098 contracts.
Kansas City hard red winter (HRW) wheat futures closed 1 3/4 to 5 cents lower in most contracts on Friday, with July KC wheat finishing the week 6 cents lower. Open interest in KC wheat rose by 4,578 contracts.
Minneapolis spring wheat futures on MIAX ended Friday from fractionally lower to 6 cents lower, with the July contract slipping 4 1/4 cents over the course of last week.
Current Trade Levels in Key Wheat Contracts
Early Tuesday pricing shows additional softness compared with Friday’s settlements. The following table summarizes Friday’s closes alongside current price changes cited in the article:
| Contract | Friday Close | Friday Change | Current Change (vs prior close) |
|---|---|---|---|
| Jul 26 CBOT Wheat | $6.46 1/4 | down 1 1/4 cents | currently down 6 3/4 cents |
| Sep 26 CBOT Wheat | $6.59 1/4 | down 1 3/4 cents | currently down 6 cents |
| Jul 26 KCBT Wheat | $6.82 | down 5 cents | currently down 3 1/2 cents |
| Sep 26 KCBT Wheat | $6.93 1/4 | down 4 1/2 cents | currently down 2 3/4 cents |
| Jul 26 MIAX Wheat | $6.90 1/2 | down 3/4 cent | currently down 3 cents |
| Sep 26 MIAX Wheat | $7.10 1/4 | down 3/4 cent | currently down 2 3/4 cents |
Speculative Positioning in U.S. Wheat Futures and Options
Managed money participants were active in reducing exposure in U.S. wheat futures and options. As of 5/19, managed money decreased its net long position in Chicago Board of Trade wheat futures and options by 14,224 contracts, bringing the net long to 4,799 contracts.
In Kansas City wheat futures and options, speculative funds trimmed 7,715 contracts from their net long, leaving them with a net long position of 30,075 contracts.
U.S. Export Sales and Commitments
Export Sales data show old crop U.S. wheat commitments at 25.241 million metric tons (MMT), an increase of 16% compared with the previous year. These commitments represent 102% of the USDA export forecast, slightly trailing the typical average pace of 103% at this time.
New crop wheat export business totals 2.029 MMT so far, which is 51.45% lower than commitments recorded in the same week a year earlier.
European Crop Conditions and International Demand
FranceAgriMer estimated that 80% of the French soft wheat crop is in good to excellent condition, unchanged from the prior week. Durum wheat in France was rated 71% good to excellent.
On the demand side, a flour mill in South Korea issued a tender for 100,000 metric tons of wheat sourced from the United States and Canada, with bids due on Wednesday.
Disclosure
On the date of publication, Austin Schroeder did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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