Wheat Market Volatility: Navigating Near-Term Opportunities in a Shifting Supply-Demand Landscape

The global wheat market in late 2025 is navigating a complex interplay of record production, shifting export dynamics, and evolving trader positioning. For investors and traders, understanding these forces is critical to identifying strategic entry points amid a backdrop of bearish fundamentals and intermittent demand-driven volatility.

Supply Dynamics: Record Harvests and Export Momentum

Global wheat production for the 2025-26 season is projected to reach a record 2.97 billion tons, driven by robust harvests in Russia and Canada. SovEcon has raised its forecast for Russian wheat exports to 43.7 million tons for the 2025-26 season, reflecting improved crop prospects. November 2025 data further underscored Russia's dominance, with exports hitting a record 5.5 million tons, including a 300,000-ton purchase by Turkey's Grain Board-the first such deal since February 2023. Meanwhile, Canada's large harvests have bolstered global supplies, contributing to a bearish market outlook.

However these supply-side pressures are partially offset by sporadic demand surges. For instance, North African and Asian buyers have driven wheat prices to near $5.40 per bushel in late November and December 2025, despite broader downward trends. This duality-ample global stocks versus urgent short-term purchases-creates a volatile environment where prices can swing between bearish consolidation and sharp rallies.

Price Trends: Bearish Fundamentals vs. Short-Term Demand

The USDA's November 2025 World Agricultural Supply and Demand Estimates (WASDE) report highlighted a record U.S. wheat production of 1.985 billion bushels for the 2025/26 marketing year, further reinforcing bearish sentiment. As a result, wheat futures prices have trended toward a one-month low of $5.20 per bushel, with open interest data reflecting mixed positioning across exchanges.

Yet, the market has not been entirely one-sided. Chicago, Kansas City, and Minneapolis futures saw price strengthening in late November 2025, driven by aggressive near-term buying and tight availability of prompt shipments. This suggests that while long-term fundamentals remain bearish, short-term demand-particularly in regions facing supply bottlenecks-can create pockets of upward momentum.

Open Interest and Positioning: A Mixed Picture for Traders

Open interest trends for December 2025 wheat futures reveal a nuanced landscape. Chicago Soft Red Winter (SRW) and Kansas City Hard Red Winter (HRW) wheat contracts showed mixed price movements, with SRW futures rising by ¼ cent and HRW futures fluctuating by 2 to 4 cents. Meanwhile, Minneapolis spring wheat contracts gained 1 to 3 cents, indicating regional differentiation in market sentiment.

Institutional positioning, as reflected in the CFTC Commitments of Traders (COT) reports, adds further complexity. As of November 2025, non-commercial (managed money) traders held a net-short position of 107,377 contracts in CBT wheat, down slightly from 110,883 the prior week. Similarly, net-short positions in Kansas City HRW wheat were reduced to 67,271 contracts. These adjustments suggest a cautious shift in speculative sentiment, with bearish positioning softening but not reversing.

Commercial traders, however, maintained a more entrenched bearish stance. For example, in Soft Red Winter wheat, commercial short positions totaled 208,379 contracts, significantly outpacing non-commercial longs of 121,406. This imbalance highlights the enduring influence of hedgers and end-users, who are likely capitalizing on low prices to secure supplies amid global oversupply.

Strategic Entry Points: Balancing Bearish Fundamentals and Short-Term Volatility

For traders, the wheat market's near-term opportunities lie in capitalizing on the interplay between bearish fundamentals and intermittent demand-driven rallies. Here are key strategies:

1. Short-Term Long Bets on Urgent Demand:
2. Traders should monitor regions like North Africa and Asia, where urgent wheat purchases have temporarily lifted prices. For example, the Turkish Grain Board's November 2025 purchase of Russian wheat signaled renewed demand in key markets.

3. Technical indicators, such as tight availability of prompt shipments, can help identify short-term buying opportunities before prices revert to broader bearish trends.

4. Bearish Positioning for Long-Term Trends:

5. The CFTC data underscores a structural bearish bias, with non-commercial and commercial traders maintaining large short positions. Investors with a longer time horizon may consider shorting wheat futures as global supplies remain elevated and demand growth lags.

6. Open interest increases in specific contracts (e.g., +4,229 in Chicago SRW wheat) could signal new buying activity, but these should be weighed against the broader bearish context.

7. Hedging Against Volatility:

8. Given the market's susceptibility to geopolitical shocks (e.g., Black Sea export disruptions) and weather-related risks, investors should employ options or spread strategies to hedge against sudden price swings.

Conclusion

The wheat market in late 2025 is defined by a tug-of-war between record global supplies and sporadic demand-driven volatility. While bearish fundamentals-led by Russia's export surge and the USDA's bearish projections-dominate the long-term outlook, short-term traders can exploit pockets of strength in urgent demand scenarios. By closely monitoring open interest shifts, CFTC positioning data, and regional tender activity, investors can navigate this volatile landscape with a strategic, data-driven approach.