I am Stephen Davis, senior market strategist at Walsh Trading, Inc., Chicago, Illinois. You can reach me at 312-878-2391.
The weekly and monthly wheat charts below make me bullish on the wheat market. Wheat futures saw strong gains this morning but ended the day below the highs. In my opinion wheat futures will trade higher later this year and into early next year.
The Commitments of Traders (COT) September 1 report showed managed money moved from net short to a net long position in Chicago wheat of 14,654 contracts. The net long in Kansas City wheat increased by 6,222 to 50,284 contracts. The COT is a weekly market report issued by the Commodity Futures Trading Commission enumerating the holdings of participants in various futures markets in the United States.
The varying crop conditions across Europe are altering the early expectations for the 2026–27 wheat season. This past weekend, U.S. and European envoys failed to make substantial progress in negotiations with Ukraine and Russia. In an article published this month, Frayne Olson, North Dakota State University NDSU Extension Marketing Specialist and Crop Economist writes that as the Russia-Ukraine war has escalated, key grain export terminals have been damaged in both countries. He says, in addition, commercial shipping is being targeted, disrupting grain flows out of the region. Both Ukraine and Russia are major producers and exporters of wheat, barley, corn and sunflower and restricted grain flows from the region are impacting global wheat prices and shifting wheat supply chains, Olson says.
The next United States Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) report is due to be released on September 11. The August 12 global wheat outlook called for higher supplies, slightly greater consumption, reduced trade, and increased ending stocks. Both EU and United Kingdom production were reduced due to prolonged above-average temperatures this summer during grain fill affecting yields.
Taking all this into consideration, an option trade strategy is to buy December 2026 wheat $8/call at 31.0 ($1,550 per option contract). Another option trade strategy is buy December 2026 wheat $9/call at 13.5 ($675 per option contract). Both of these options expire on November 20, 2026. Buy options out of the money and get them in the money. When they are in the money, take your profit.
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Stephen Davis
Senior Market Strategist
Walsh Trading
Direct 312 878 2391
Toll Free 800 556 9411
sdavis@walshtrading.com
www.walshtrading.com
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