Chicago-listed CBOT wheat (WHEAT) is trading down more than 1% today, and is not reacting to news from Russia's SovEcon, which lowered its preliminary wheat crop estimate for 2025. Declines continue to be spurred by a strong U.S. dollar and good weather for crops in the key Midwest region of the U.S., where bears were also not spooked by forecasts of rain in the U.S. Southwest.
- The latest Commitment of Traders report, published on October 15, indicated a still bearish position on the part of large speculators, while at the same time a large short position on the part of Commercials (companies hedging against price declines). This suggests that both speculators and producers hedging supplies are expecting lower wheat prices. On the other hand, however, the short position on the part of Managed Money (speculators) in CoT reports has been declining since August
- Sovecon estimates 80.1 million tn of harvest in 2025, compared to 81.5 million tn this year (the least since the 2021-2022 season) and a 5-year average of 88.1 million tn. The reason for the lower estimates is the drought, which has reduced both planting acreage and yields. According to Sovecon, winter wheat will enter the cold season in very poor shape, despite stronger rainfall in some supply-relevant regions of Russia. Drought could cause yields to fall to their lowest levels since 2019, suggesting a problem with global wheat stocks, which are already relatively low
- Consultancy IKAR predicts wheat production in Russia, in 2024, at 81 to 85 million tons after recent rains, but these forecasts are not supported by Sovecon concerned about the poor condition of winter wheat, which could surprise with much lower yields. Significantly, it is the large supply of Russian wheat in 2022-2023 that has been a major factor, depressing global wheat prices.
- S&P estimates a 16% drop in Ukraine's wheat exports this year, despite the Black Sea trade agreement in place and record demand for Ukrainian grains from EU countries as well as Bangladesh and Vietnam, among others. Ukraine estimates a 22.4 million-ton harvest for the current season, down 600,000 tons year-on-year.
WHEAT (H1)
Looking at the chart of WHEAT on the H1 interval, we see that prices have again settled below three, key moving averages indicating an overheating of the uptrend and a possible test of the area around the 61.8 Fibonacci elimination of the upward wave initiated after the last roll-off. The market has not accepted levels above $611.
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