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Wheat Market Weakens Despite Strong Export Commitments

The wheat market has faced declines, continuing a negative trend amidst positive export data. Factors such as spec fund positions and upcoming USDA reports could affect prices in the short term.

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AI Rating:   5

The recent performance of the wheat market indicates a troubling trend for investors. Despite the overall strength of corn and bean prices, wheat contracts have shown marked losses, with Chicago SRW futures down significantly. Specifically, the July contract has dropped 21 ¼ cents within the week. Such price declines are a concern as they may affect investor sentiment and future pricing strategies.

The Commitment of Traders data suggests that speculators are adjusting their positions, notably reducing their net short position in CBT wheat. The decrease of 7,681 contracts points to a potential shift in trading strategy, indicating that speculators might expect a reversal in price direction. However, the extension of record net short positions in Kansas City wheat—a reduction of nearly 5,000 contracts—could compound the bearish sentiment prevalent in the market.

Furthermore, the weekly Export Sales report revealed that total wheat export commitments have risen by 14% compared to last year, although they stand at only 97% of the USDA forecast. This shortfall relative to the normal sales pace raises concerns about future demand and overall market outlook.

This week also anticipates the release of the USDA's first WASDE report for the 2025/26 marketing year, with analysts predicting stable world stocks. While such forecasts could provide a foundation for price stabilization, uncertainties surrounding global supply and weather conditions loom large. Concurrently, France's estimated soft wheat crop at 74% good/excellent holds promise for European wheat, but this could further impact US export competitiveness.

Overall, the current environment poses challenges for wheat prices, underscored by bearish momentum and reduced speculative engagement. Investors should remain cautious as various data points, including USDA forecasts and emerging trends in export commitments, will likely influence market directions in the near future.

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