Wheat futures on the Chicago Board of Trade (CBOT) surged to their highest levels since October, driven by worries over potential crop damage in the Black Sea region due to cold weather and short covering by commodity funds.
Key Highlights:
Price Movement:
Most-active CBOT wheat futures settled up 15.5 cents at $5.87¾ per bushel.
Corn futures ended slightly higher, closing at $4.95¼ per bushel, while soybeans rose by 3.5 cents to $10.60½ per bushel.
Market Factors:
Concerns about wheat crops in Russia and Ukraine—major global suppliers—have intensified due to forecasts of colder weather next week, raising fears of crop losses after an unusually mild winter.
Commodity funds had been holding a net short position in CBOT wheat, betting on falling prices, but recent market movements prompted short covering.
Analyst Insights:
Karl Setzer from Consus Ag Consulting noted that funds are currently long on corn and soybeans while wheat is trying to catch up. He remarked, “Typically, you don’t see them short one complex and long the other two, so when there’s buying it gravitates toward that one.”
Broader Market Context:
The grain markets have received a boost this week from the suspension of planned U.S. tariffs against Canada and Mexico, alongside measured Chinese counter-tariffs that excluded crops.
Concerns had been mounting over potential retaliatory tariffs affecting U.S. grain sales to major importers like China and Mexico.
Trade Relations:
President Donald Trump’s nominee for U.S. trade representative, Jamieson Greer, indicated plans to review China’s compliance with the “Phase 1” trade deal, which mandates increased purchases of American farm products. Analysts believe enforcing compliance will be challenging, as Setzer pointed out, “How do you force an importer to buy more when they don’t need it?”