🌾 Prices Surge Amid Frost Concerns & Short Covering 📈 (February 18, 2025)

📌 Market Performance: Strong Price Gains at CBoT, Mixed Trends on Euronext

Wheat futures continued their volatile movement on Tuesday, with sharp gains at the Chicago Board of Trade (CBoT) and mixed developments at Euronext.

• Euronext (MATIF):
  • March contract: -1.00 EUR to 231.00 EUR/t
  • September contract: +1.25 EUR to 237.50 EUR/t (highest since October 2024)
• CBoT:
  • March contract: +22.25 ct to 600 ct/bu (210 EUR/t), up 3.85%
  • Weekly gain: +17.25 ct (3.0%)

📌 Key takeaway: The U.S. market surged significantly, while Euronext gains were more limited due to currency effects and weak short-term demand.

🌍 Market Drivers: Frost Risks & Short Covering Move the Market

Concerns over frost damage in Russia, Ukraine, and the U.S. Midwest have led to active short-covering by hedge funds.

• In Russia & Ukraine, sub-zero temperatures without adequate snow cover could harm winter wheat, leading to potential yield losses in the 2025/26 season.
• In the U.S. Midwest, recent cold spells raised concerns about wheat dormancy, but damage assessments are still ongoing.
• Hedge funds & commodity traders have responded with short-covering, driving prices up.

💡 Hedge fund positioning:

• CBoT wheat: Net short position reduced by 7,633 contracts to 82,809 contracts
• Kansas wheat: Net short position reduced by 5,733 contracts to 53,248 contracts

📊 USDA WASDE Report & Global Supply Concerns

The latest USDA WASDE report (February 2025) revised global wheat ending stocks lower to 257.56 million tons, reflecting tightening global supply.

• Global wheat ending stocks: -1.22 million tons to 257.56 million tons
• EU wheat exports: Reduced by 1 million tons to 28 million tons
• US wheat export bookings: 569,600 tons last week (+63% YoY, 7-week high)

📌 Key takeaway: The global supply situation remains tight, but weak EU exports are keeping Euronext wheat under pressure.

📌 Technical Factors & Currency Impact

• The US dollar weakened, boosting CBoT wheat by making U.S. grain more competitive.
• The euro strengthened, making Euronext wheat exports less competitive.
• Lower Black Sea wheat prices are limiting short-term demand for Western European wheat.

🔮 Price Forecast for the Next Three Trading Days (Feb 19–21, 2025)

• CBoT Wheat: After the strong rally, some profit-taking is expected. Prices may correct to 585–590 ct/bu unless additional bullish news emerges.
• Euronext Wheat: Sideways movement is expected due to the strong euro. March futures are likely in the 230–235 EUR/t range.
• Mid-Term Outlook: If frost damage materializes, the rally could continue. Otherwise, a market correction is likely.

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📌 Conclusion:

The wheat market is highly volatile, driven by weather risks and hedge fund activity. Frost concerns and tightening global stocks are bullish factors, but export struggles in the EU and a strong euro remain obstacles.

📊 Stay tuned for more updates! 🚜

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