WHEAT gains 3% reaching the highest level since mid-December as USDIDX erases early gains 📈

US Wheat futures on Chicago Board of Trade (WHEAT) surge more than 3% today, reaching levels unseen since 12 December 2024. A new US president Trump signalled a less aggressive approach to tariffs, delaying implementation to review current trade agreements and policies with China. The US dollar is weakening today, after a stronger first part of a day. This positively impacts the US agricultural commodities prices.

• Commitment of Traders data indicated spec funds adding 5,756 contracts to their net's short position in Chicago wheat futures and options as of Tuesday to almost 95k contracts
• The export sales report from the last Thursday showed wheat sales in the week of January 9 at almost 514 MT bringing a total sales and shipments to 17.705 MMT. It's 77% of USDA’s projection, well below 85% average sales pace.

The CoT report (as of 14 January)

According to the last Commitment of Tradres report, so-called Commercials (producers, processors, users, merchants etc.) had net long positions at 13k wheat contracts on CBOT potentially expecting possible price increases or hedging strategies. On the other hand, a Managed Money (large commodity speculators) held net short almost -94k contracts, suggesting more bearish sentiment. The important weekly changes came in by decreasing Commercials positions by more than 7k contracts, increasing managed money net short by almost 4k contracts.

• • Producer/Merchant Longs: Decreased by 7,005 contracts.

  • Managed Money Shorts: Increased by 3,855 contracts.
  • Swap Dealer Longs: Increased by 5,864 contracts.

As for now, the wheat market on CBOT is not heavily concentrated, but a slight tilt in dominance exists among a few short-side traders, which could influence price trends. Still, the large (and rising) net short position held by Managed Money could exert downward pressure, however demand from commercials is solid, and if US dollar decline, fundamentally wheat may try to reverse the downtrend trend, rising to $600. In this case, quite big net short position from speculators may end in cornering the market and short squeeze.

Source: xStation5