Wheat Futures Retreat from Two-Year High on Profit-Taking

U.S. wheat futures are poised for a lower open on Tuesday, with traders anticipating a drop of 4 to 6 cents per bushel at the Chicago Board of Trade (CBOT). The expected decline is primarily driven by profit-taking after prices surged to a two-year high on Friday.

Pressure from Profit-Taking and Oil

The primary bearish pressure on wheat comes from investors capitalizing on the recent rally. After a significant price run-up, such pullbacks are a common market dynamic. Adding to the downward momentum, falling crude oil prices are also weighing on the agricultural complex, as lower energy costs can translate to reduced production and transportation expenses for grains.

As of the latest indications, specific futures contracts were trading lower:

• CBOT September soft red winter wheat was last down 5 cents at $6.55 per bushel.
• K.C. September hard red winter wheat fell 2.5 cents to $7.26-1/2 per bushel.
• Minneapolis September spring wheat declined 7-3/4 cents to $6.98-1/2 per bushel.

Black Sea Tensions Limit Losses

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Despite the profit-taking, significant supply-side risks are providing a floor for prices and preventing a steeper sell-off. Ongoing attacks by Russia and Ukraine in the Black Sea and Sea of Azov have stoked fears about the availability and safe passage of wheat shipments from the critical export region.

Underscoring these concerns, the Sovecon agriculture consultancy on Tuesday reduced its forecast for Russian wheat exports. The firm noted that it does not expect maritime navigation in the Sea of Azov to return to normal in the coming weeks, further tightening the global supply outlook.

US Crop Conditions Stable

In its weekly crop progress report, the U.S. Department of Agriculture (USDA) stated that the domestic winter wheat harvest was 81% complete as of Sunday. The agency also maintained its good-to-excellent rating for the U.S. spring wheat crop at 53%, unchanged from the prior week.

This stable rating for spring wheat was better than market expectations. According to the source, analysts had anticipated a two-percentage-point decline due to recent hot and dry weather in the northern Plains, making the USDA's assessment a mildly bearish factor for prices.