Grain Spreads: Funds Pile on Wheat

Sean Lusk General Commentary


Managed money continues to press the wheat market lower as every bullish story has been brushed aside. Funds sold another 10K of US Chicago wheat yesterday, which brings the net short to approximately 85K in my view, which is nearly the size of the long in soybeans. This is more than double the short the sector carried 30 days ago. Today saw Chicago wheat trade a mild dead cat bounce of 10 cents before retreating to just above unchanged for the session. US export inspections reinforce the lack of export interest for US wheat. At 200K metric tons this week, the year-to-date volume is 10.5 million metric tons or just 400K metric tons below the same point a year ago. Last year’s inspections were nothing to write home about. Basis levels overseas particularly from Russia and the EU are lower, which in my view leaves US wheat noncompetitive for now. That said there are crop quality issues here and in Argentina, but for now the funds are in control, and given that the grain corridor is wide open in Ukraine for now, funds have added to the short side and have defended their positions on rallies. The recent blackout in Ukraine has 90% of the country now without electricity. Russian missile and drone attacks on critical electric and water infrastructure continues to send the country into darkness as the harsh realities of winter set in. In my opinion the lack of power slows the movement of grain, with some sections of railroad “de-energized” currently. Nearly all of Ukraine’s sea and river ports were forced to suspend work to varying degrees, but grain keeps moving albeit at a slower pace. In summary it seems like this war drags on through winter, which in my view leaves the potential for the pathway to be shutdown at any moment. 

Trade Ideas






Please join me every Thursday at 3pm Central for a free grain and livestock webinar. We discuss supply, demand, weather, and the charts. Sign Up Now

Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.​

Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.​

All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall not be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

312 957 8103

888 391 7894 toll free

312 256 0109 fax