Wheat hedgers wear shorts. This is the biggest shorts since May 2019. Number of short contracts, while corn and soy are in long, tells us that the market is preparing for big numbers announcements…You need to remember one thing: when you wear shorts, it is important not to burn.

With Russia’s invasion of Ukraine, the global economy suffered consequences — the grain trade suffered, as both Russia and Ukraine are major players in the wheat market. In particular, the globe is still attempting to recover from the effects of COVID-19. And food supply is still on the table.

Wheat hedgers wear shorts. This is the biggest shorts since May 2019. Number of short contracts, while corn and soy are in long, tells us that the market is preparing for big numbers announcements. It’s clear that Russia will end the season sitting on huge stocks and India is trying to avoid imports, waiting for the new crop. 

According to U.S. Wheat Associates, market sentiment has become increasingly bearish and prices have significantly dipped in the buyer’s favor; however, many unknowns linger in the market. Will the underlying uncertainty of Putin’s war continue to support the market? In more recent news, on Jan. 25 a Russian missile struck a Turkish cargo ship in the port of Kherson in Ukraine, also sending futures momentarily higher. Volatility is a concern for as long as the war continues. Global balance sheets will also remain tight into the new crop year, and global wheat consumption continues to outpace production. Another factor, though not unique to this year, the weather will continue to play a significant role in prices as markets closely monitor the drought-afflicted Argentine wheat crop and HRW conditions in the U.S. Central and Southern Plains. Wheat dips to its lowest since 2021 on good weather and big acreage across the globe, except the Black Sea. US snowfall may protect against the upcoming cold. Euronext wheat futures downstep to a long-time low, as a firm euro and competition from the Black Sea region again weighed on prices.

As of January 1, 2023, wheat stocks in agricultural organizations of Russia amounted to 22.1 million tons, according to Rosstat. This year’s indicators are 42% higher than the average for the last five years partly because of slower compared to available wheat exports pace, partly because of the War which Russia launched against Ukraine. Rosstat’s data do not represent all market participants, but clearly show us the total volume of supply in the country.