For the week, March corn gained 8¾, March soybeans fell 13½, March soybean meal lost $5.50 per short ton and March soybean oil was up 9 points. March hard red winter wheat surged 17 cents, March soft red winter wheat was 17¼ higher and hard red spring wheat gained 5¼ cents.
Wheat futures surged 17 to 23 cents in the three classes on Friday, adding war and weather premium, and all three classes were up for a second straight week on fund short covering ahead of a three-day weekend.
Jerry Gulke, president of the Gulke Group, says wheat traders are watching headlines in the Black Sea after Russia bombed a Ukrainian port. There are also increased concerns about winter kill in major winter wheat production areas with the bitterly cold temperatures in the forecast.
“It’s going to get really cold next week. It’s 30-something below zero, actual temperature, in North Dakota, and it’s going to sink South. The last time that happened I recall was 1996, I think,” he says.
Wheat has been the dog of the grain complex for months now, especially compared with corn, which reversed off lows set in August 2024 and rallied to new highs on Friday.
Is it possible the wheat market is finally seeing the same paradigm shift that’s already taken place in the corn market? Gulke is watching several signals for an answer, including speculator activity in the wheat market.
Managed money funds have been short in all three classes of wheat for nearly 2.5 years, essentially since the highs were made in wheat after the Black Sea war erupted.
However, according to Friday’s CFTC Commitment of Traders Report, those funds were short nearly 82,000 contracts of soft red winter wheat last week (futures only) and covered or bought back 7,900 of those positions this week. In hard red winter wheat, the funds were short over 35,000 contracts and covered more than 5,500.
Meanwhile, the index fund traders, who only trade long, also bought around 10,000 contracts of Chicago wheat.
According to Gulke, they are buying as a hedge against inflation.
The key now is whether the traders keep buying and go net long in the wheat markets because that could produce a much bigger rally.
”The bottom line is they’re not long yet in the Chicago wheat, and the large spec, which is the one that supposedly drives things, is not long — it’s still short, has been short and has been short for about 2.5 years,” he explains.
Technically, can the wheat markets, just like it was for corn, trade above the October/November highs?
Hard red winter wheat did close above the $6 mark on Friday, and soft red winter closed right at $6, so he says the markets might be poised to take the next leg up.
“We got above the November highs in Chicago, but not the October,” Gulke says. “But if you look at Kansas City wheat, it looks stronger than Chicago, and it’s right at or above the October high.”
The other key is if corn is ready to give up its leadership role in the grain complex and pass the baton to wheat, where prices had recently dipped low enough that wheat was being used in feed rations.
It may be too early to tell, Gulke says.
Gulke has most of the 2024 spring wheat corp stored yet on farm in North Dakota after lifting hedges in 2024, and is unsold on the 2024 soft red winter wheat crop.
He says he’s not fond of owning call options, but this may be a time that they work (most expire worthless).
If producers sold majority of the corp off the combine then re-ownership may be in order.
Wheat has a tendency to move higher quickly and $6.00 wheat may look rather cheap to speculators and index funds.
For more information of wheat outlook or use of futures and options in other grains contact Jerry at info@gulkegroup.com.
