Wheat Futures Extend Losses Amid Dollar Strength, Mixed Export Signals
Chicago wheat futures led declines in the grain complex on Monday, extending last week's weakness as a rallying U.S. dollar weighed on export competitiveness. The broader market sentiment remained cautious despite some supportive underlying data.
The most-active Chicago Soft Red Winter (SRW) wheat contract for March delivery settled at $5.26 1/2, down 11 1/2 cents. Kansas City Hard Red Winter (HRW) and Minneapolis Spring Wheat futures followed suit, shedding 9 to 10 cents. The U.S. dollar index, a key factor for globally traded commodities, was up $0.586, making U.S. supplies more expensive for foreign buyers.
Weekly export inspections provided a mixed picture. Shipments of 326,828 metric tons for the week ending January 29 marked a 13.76% drop from the previous week. However, the total was still 29.11% higher than the same week last year. Mexico was the top destination, followed by Taiwan and Malaysia. Year-to-date shipments for the marketing year remain robust, up 18.61% compared to last year.
"The dollar is the immediate headwind today," said market analyst Rebecca Shaw of AgWatch Insights. "But the underlying export pace, especially to Asia, and the fact that managed money is slowly reducing its massive short position, suggests the floor might not be far away. The Taiwan tender last week is a reminder of consistent demand."
Latest Commitments of Traders data showed speculators reduced their net short positions in Chicago and Kansas City wheat futures and options in the week ending January 27, a move often interpreted as covering bets on lower prices.
Trader Reactions: A Spectrum of Views
Michael Ridgeway, a veteran floor trader in Kansas City, offered a measured perspective: "It's a technical pullback within a broader range. The fundamentals haven't collapsed; we're just adjusting to currency moves and digesting the recent export data. The year-on-year shipment growth is the figure I'm watching."
Sarah Chen, a portfolio manager at a commodity fund, highlighted the strategic angle: "The managed money short-covering is notable. It doesn't signal a bull run, but it reduces downward momentum. We're advising clients to look for value opportunities on these dips, particularly in HRW, given its export profile."
Frank Delaney, an independent farmer from Nebraska, reacted more sharply: "It's infuriating. The USDA talks about strong demand, my crop looks good, but the board is red because of Wall Street's currency games and paper traders. These prices barely cover rising input costs. The system feels rigged against the actual producer."
Closing Prices for Key Contracts (March 2026 Delivery):
• CBOT SRW Wheat: $5.26 1/2, down 11 1/2 cents.
• KCBT HRW Wheat: $5.34 1/2, down 10 1/4 cents.
• MGE Spring Wheat: $5.68 1/2, down 9 3/4 cents.
Disclaimer: On the date of publication, the author did not have positions in any securities mentioned. This information is for educational purposes only and was sourced from Barchart and CFTC data.