The wheat market ended the week in a tight trading range after a sharp decline in the first half of the week. Beneficial rains expected in the southwest Plains, along with increased harvest activity in Argentina and Australia, contributed to bearish sentiment. Additionally, the prospect of Black Sea peace talks added further pressure. However, Russia's attacks on Ukraine's energy facilities on Thursday introduced uncertainty, as such attacks are likely to continue until trilateral talks begin.
December 2026 KC wheat led the complex lower, with losses of 39 cents on a 47.50-cent trading range, reaching its lowest levels since early July. December Chicago wheat 2026 saw a 45-cent trading range with losses of 35 cents, while MWZ26 had a 40.50-cent trading range with losses of 33.50 cents. Funds continue to add to shorts and liquidate longs, with managed funds now short over 51K in Chicago wheat. This marks the eighth consecutive week of losses, the highest weekly losing streak since 1997.
Despite the bearish outlook, Sean Lusk of Walsh Trading suggests a buying opportunity, citing the oversold market and the potential for both conflicts to escalate. He proposes a trade idea: buying the July 27 Chicago wheat 8.00/9.00 call spread while selling the July 27 Chicago wheat 9.00/8.00 put spread, with a bid at a negative -85-cent collection. The maximum risk at expiration next June is 15 cents or $750 per spread plus commissions and fees.
Lusk expects July 27 to trade to a retracement level near 7.50/7.70, suggesting an exit at positive -30 cents for a gain of 55 cents less trade costs and fees. He emphasizes that futures and options trading involves substantial risk and is not suitable for all investors.