Harvest Pressure and Russian Tax Cuts: Why Wheat Futures Are Prime for a Short Play

The U.S. wheat harvest is lagging behind historical averages, while Russia's elimination of export taxes has unleashed a flood of competitively priced grain onto global markets. For traders, this confluence of factors presents a compelling case for shorting CBOT wheat futures—particularly the July 2025 contract (ZWN25)—as bearish supply dynamics and technical headwinds align. Let's dissect the fundamentals and technicals to identify optimal entry points and risk parameters.

The Bearish Supply Avalanche

The USDA's July 7 report revealed winter wheat harvest progress at 53% nationwide, 9 percentage points behind last year's pace and just 1 point shy of the five-year average. While spring wheat development is ahead of both last year and the average (61% headed vs. 56% and 58%, respectively), the overall U.S. production forecast rose to 1.929 billion bushels, driven by higher spring wheat yields. Key states like Kansas (82% harvested) are outpacing laggards like Nebraska (22%), but the total surplus is undeniable.

Meanwhile, Russia's July 9–15 zero wheat export tax—its first since 2021—has slashed the cost of Russian wheat on global markets. With a $228.7/ton indicative price and no duty, Russian exporters can undercut U.S. and European competitors in key regions like the Middle East and Asia. Analysts expect this policy to boost Russian exports by 10–15%, further pressuring global prices.

Technical Levels: Where to Short and Set Stops

The technical picture for ZWN25 confirms the bearish bias. As of July 7, the contract trades at $5.40 2/3 per bushel, having declined 1.73% in the prior session. Key support and resistance levels to watch:

• Immediate Support: The $5.06 level (May 13 low) is critical. A breach here could trigger a freefall toward the $4.90 200-day SMA, which has acted as a long-term resistance-turned-support.
• Near-Term Resistance: The $5.28 zone (May pullback high) and $5.56 July 3 close form overhead barriers. Bulls need to reclaim $5.60 to negate the downtrend.

The RSI (14) remains in oversold territory (below 30), but a bounce from the lower Bollinger Band suggests short-term exhaustion. However, the medium-term trend remains bearish as prices stay below the mid-Bollinger line. Traders should enter short positions below $5.45, targeting $5.06 with stops above $5.60.

Fundamental Catalysts to Monitor

• Harvest Progress: Track USDA updates for winter wheat completion. A harvest pace above 60% by late July could accelerate price declines.
• Russian Export Data: Look for July export volumes from Russia. Volumes exceeding 3 million tons would signal sustained competitive pressure.
• Weather Updates: Persistent drought in the U.S. Southern Plains (Texas, Kansas) could trim yields, but current forecasts suggest minimal impact.

Risk Management and Exit Strategy

• Entry: Short ZWN25 at $5.45 (July 7 close).
• Target: $5.06 (swing low) with a $4.90 backup target.
• Stop-Loss: $5.65 (5% above entry).
• Profit-Taking: Exit 50% of the position at $5.20 to lock in gains.

Conclusion: A Bearish Setup with Clear Technical and Fundamental Anchors

The combination of a record U.S. harvest, Russia's tax-driven export surge, and oversold technicals creates a high-probability short opportunity in wheat futures. Traders should prioritize discipline: let profits run toward $5.06 while using stops to limit downside risk. As global supplies swell and geopolitical dynamics favor cheap Russian grain, this trade aligns with the supply-driven bear market playing out in agriculture commodities.

Stay vigilant—weather and export data could shift the narrative—but for now, the odds favor the bears.