I am Stephen Davis, senior market strategist at Walsh Trading, Inc., Chicago, Illinois. You can reach me at 312-878-2391.
The wheat market has been above the 200-day moving average for most of this year. In my opinion, that bullish trend will continue.
In its most recent Wheat Market Outlook, the United States Department of Agriculture (USDA) Economic Research Service forecasts U.S. exports at a three-year low, with domestic supplies limited by drought and the smallest area planted on record (dating back to 1919).
The USDA World Agricultural Supply and Demand Estimates (WASDE) report on October 9, states that this month’s 2026/27 global wheat outlook is for higher supplies, greater consumption, reduced trade, and slightly lower ending stocks. Looking at Russia, forecast as the world's leading wheat exporter, the report says exports are now the lowest in five years at 40.0 million tons with logistical disruptions caused by the continuing conflict in the Black Sea region reducing shipments to date well below their long-term average.
WASDE projects 2026/27 global ending stocks fractionally lower at 276.0 million tons with decreases for the EU, China, Argentina, Egypt, and several other countries nearly offset by increases for Russia, Australia, and the United States.
Meanwhile, the WASDE report raised global consumption 1.2 million tons to 827.9 million, primarily on higher feed and residual use for China and the EU.
After the one-and-one-half month selloff in the wheat market, the risk/reward to be short wheat does not look encouraging, in my opinion. Watch for wheat prices to go higher into the end of this year and early next year. Wheat is at oversold levels and will rally back, in my opinion.
An option trade strategy is buy March 2027 Wheat $8 calls at 10.5 ($525 per contract) Buy March 2027 Kansas City wheat 850 call at 11 ($550 per contract). These options expire February 19, 2027. When the options trade to the strike prices, sell them and bring money into your account.
To discuss trading strategies, contact me anytime. Have an excellent day.
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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