Wheat Futures Extend Losses Amid Dollar Strength, Mixed Export Signals

Wheat futures extended their decline on Monday morning, with losses registered across all three major U.S. trading hubs. The weakness follows a retreat on Friday, pressured by a firmer U.S. dollar which gained $0.893 on the index, making dollar-denominated commodities less attractive to overseas buyers.

In Chicago, Soft Red Winter (SRW) wheat for March delivery closed Friday with losses of 3 to 4 ¼ cents, though it managed to hold a weekly gain of 8 ½ cents. Open interest fell by 8,280 contracts, suggesting some position unwinding. Kansas City Hard Red Winter (HRW) futures were down 2 to 3 cents, with the March contract clinging to a 4-cent weekly advance. Minneapolis spring wheat finished 3 to 4 cents lower.

The latest Commitment of Traders report revealed speculators were covering short positions ahead of the weekend. Managed money traders reduced their net short stance in Chicago wheat futures and options by 15,957 contracts to 94,743 as of January 27. A similar trend was seen in KC wheat, where the net short position was trimmed by 2,689 contracts.

On the export front, the outlook is nuanced. Cumulative wheat sales commitments for the marketing year stand at 21.595 million metric tons (MMT), running 18% ahead of last year's pace and representing 88% of the USDA's full-year forecast. This aligns closely with the five-year average of 89%. In a concrete demand signal, Taiwan's flour millers purchased 106,350 metric tons of U.S. wheat in a tender late last week.

Market Analyst Perspective: "The market is caught between supportive export demand and the macro headwind of a strong dollar," said Michael Vance, a commodities strategist at Agrinomics Consultancy. "The Taiwanese purchase is a solid vote of confidence, but traders are clearly weighing that against broader currency dynamics and profit-taking after last week's gains."

Trader Reaction: Sarah Chen, an independent grain trader, offered a more pointed view: "This is classic market indecision. The specs are covering shorts because they got nervous, not because they see a roaring bull market. Until we see consistent, massive export sales that blow the USDA forecast out of the water, these rallies will remain fragile. The dollar is the wrecking ball for ag markets right now."

Farmer's Outlook: From the producer side, David Miller, a wheat farmer in Kansas, struck a cautious note: "The price isn't where we need it to be with input costs what they are. Seeing exports ahead of last year is good, but the weekly volatility makes planning nearly impossible. We're hoping this demand pace holds."

Closing Prices & Current Trading (as of Monday morning):

• Mar 26 CBOT Wheat closed at $5.38, down 3 1/2 cents; currently down 4 1/4 cents
• May 26 CBOT Wheat closed at $5.46, down 4 1/4 cents; currently down 4 1/4 cents
• Mar 26 KCBT Wheat closed at $5.44 3/4, down 2 1/4 cents; currently down 4 1/4 cents
• May 26 KCBT Wheat closed at $5.55, down 2 3/4 cents; currently down 4 1/2 cents
• Mar 26 MGE Wheat closed at $5.78 1/4, down 3 1/4 cents; currently down 4 3/4 cents
• May 26 MGE Wheat closed at $5.92 1/2, down 3 cents; currently down 5 cents

Disclaimer: On the date of publication, the author did not have positions in any securities mentioned. This article is for informational purposes only and was sourced from Barchart.com data and analysis.