It’s been a tale of two markets for the wheat complex over the past few months as fresh contract lows dominated early. Harvest pressure and fund selling finally gave way to warming trade negotiations and short cash squeeze and fund short covering has values testing three-month highs.
Fundamentally the market hasn’t seen a huge change as of mid-November, but money flow wanting to lighten up on short positions and minimal farmer selling to offset it can easily move values upward.
On top of this – and warming trade relations with China – we had domestic buyers get into a logistical/procurement issue that supported both futures and cash values. This seems to be possibly cresting as we go into holiday season but is a good reminder that even down-and-out markets do kick back when one side of the trade is too overweight.
Staying on demand factor, China booked a few small cargoes of soft red winter wheat, and while it’s easily covered by river market, we continue to see a small amount of interest as China had some serious issues getting with its winter wheat crop. Any other issues that might arise through growing season will now be compounded.
With the U.S. government reopen, we will get a plethora of delayed data to digest and wrap our arms around. Though if we lean into the export inspections reports that were not delayed, we should be right on track to hit or beat current USDA export goalposts.
The questions are, as we flip the calendar to 2026, can we maintain competitiveness with the European Union/Russia, and will China have any issues arise?
Ted Nelson is a risk management consultant with StoneX Group Inc., Kansas City, MO; 800-255-6381.