Futures contracts for wheat in Chicago Board of Trade (WHEAT) are down nearly -2.5% today, driven by weather data signaling a reduced risk of poor harvests in the Northern Hemisphere. Improved and forecasted weather patterns have triggered a wave of profit-taking. The market is now pricing in a lower risk of a supply shock this season, although approximately 10% of crops in southern Russia remain at risk due to May frosts and drought in key growing regions. However, the coming days are expected to bring more favorable conditions both in this region and in China, where traders had also feared crop damage.
Commitment of Traders (CoT) data as of May 20 showed that the net short position in wheat contracts stood at nearly -108.9k contracts, with 80.16k of these held by "Managed Money" — large hedge funds and institutional speculators. The reduction in short positions for this group compared to the previous CoT report was just under 700 contracts, indicating a limited risk of short covering from current levels — especially considering the renewed downward trend.
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Wheat has pulled back after an attempt to break out of the descending price channel. On the hourly chart, we see oversold conditions indicated by an RSI near 24.
Source: xStation5
Wheat (D1)
On the daily chart, wheat once again failed to break and sustain above the EMA50 (orange line), effectively ignoring the adverse weather conditions threatening yields in key regions of Ukraine and Russia.
Source: xStation5
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