Wednesday, December 17, 2025: Pre-Dawn
Wheat futures are playing a familiar tune – back to testing the October lows after a brief November detour. Chicago March'26 settled Monday at $5.09, barely a dime above the five-year low of $4.93¾ touched in mid-October. We're now looking at prices last seen consistently in August 2020, a lifetime ago in market terms.
Brushing up on the narrative arc leading to our current condition we see that Mid-October saw wheat hit that five-year basement on the weight of massive global supply. November brought a 50-60 cent relief rally as spec funds covered shorts and rumors of Chinese buying sparked brief optimism. Now December has given it all back… and then some. Tuesday saw wheat slide some with Chicago down 9-11¾ cents, KC down 6-7 cents, and Minneapolis down 2-3 cents at midday.
Why do we find ourselves examining the prices’ proximity to our toes? The December WASDE report landed like a bomb on December 11th. Global wheat production now pegged at a record 837.8 million metric tonnes, up 9 million tonnes from November's already-bloated estimate. This is the big leagues – Canada jumped to 40 million tonnes (from 37), Australia now sits at 37 million (their third-largest harvest on record), Russia climbed to 87.5 million, and Argentina – well, Argentina is writing a new record at 24 million metric tonnes in the USDA's book, though the Rosario Grains Exchange is calling it 27.7 million. Argentina is back to being the price-setter for global wheat exports, and their quotes dropped $7 per tonne in December to become the cheapest wheat on the planet.
Ending stocks are forecast to climb to 274.9 million tonnes, a four-year high after five consecutive years of declines. U.S. Wheat Associates summed it up bluntly: "Large global supplies continue to be the overwhelming bearish price driver."
….But here's where the plot thickens: Russia announced their export tax on wheat is now set to ZERO. Argentina lowered export duties. Ukraine confirmed they will NOT reinstate export limits for 2025/26. These policy moves aren't just bearish footnotes – they're opening the export floodgates from the world's biggest shippers just as we're already drowning in supply.
…And then there's the geopolitical wild card. Progress in Russia-Ukraine peace talks is hanging over the market like a wet blanket. A peace deal means sanctions ease, which means even MORE Black Sea wheat and corn flooding global markets. It also explains why crude oil is challenging three-year lows and why the Russia-Ukraine risk premium has evaporated from wheat prices. The trade that once feared supply disruptions now fears supply abundance.
The U.S. picture is nuttier than a squirrel turd. Export inspections continue to shine – 488,025 metric tonnes (17.93 million bushels) shipped in the week of December 1, up 61.38% from the same week last year. Marketing year total now stands at 425.42 million bushels, running 21.9% ahead of last year's pace. Week-ending November 13 export sales hit 850,000 metric tonnes (31.23 million bushels), the second-highest weekly figure of the marketing year. Total commitments through mid-November reached 666 million bushels, 24% greater than last year and a nine-year high. AND prices continue to fall!
Interpreting the surreal nature of this phenomenon we can identify a global market where U.S. wheat is now the cheapest available (CBOT basis), while it's STILL not cheap enough to out-compete Argentine or Russian offers. The International Grains Council noted wheat hit that five-year low in mid-October, bounced to a four-month high in November on Black Sea tensions and Chinese interest rumors, then surrendered the gains as reality reasserted itself.
The U.S. Dollar Index is down 1.58% for December to date, which should be helping U.S. competitiveness. It's the best thing we've got going, frankly. But a weaker dollar can't overcome a global wheat avalanche.
Commitment of Traders (COT) data caught up through late November showed spec funds had covered a big chunk of their shorts during the November rally – about 57,000 contracts bought back in Chicago wheat since mid-October. That surge of short-covering provided the rocket fuel for November's 50-60 cent pop. But it also depleted some of the stored buying energy. The next phase of buying by funds will require motivation from factors not yet visible to the trade.
The one-month trendline in wheat futures is downward. The December WASDE confirmed what the trade already suspected but had briefly hoped wasn't quite as bad as feared. USDA now projects the 2025/26 season-average farm price at $5.10 per bushel, down another 20 cents from the prior month estimate. That's about 70 cents below the 16-year average of $5.84.
So we've got excellent crop conditions supporting next year's production at the same time global supplies are already at record highs. The calendar year 2026 isn't looking particularly friendly from a price perspective.
Natural Gas has declined 24% over the last seven sessions due to seasonally warmer weather, reducing heating demand. This at least provides some relief on input costs for the 2025 crop, as anhydrous ammonia production costs track natural gas prices.
Diesel is still reaching for its mid-October low, now less than a nickel below current trading. The energy complex across the board is feeling the weight of warm weather and peace talk optimism.
The paradox we're living with: export pace remains exceptional, U.S. winter wheat crop looks outstanding, the dollar is cooperating, and yet prices are testing five-year lows. This is what happens when global production records get broken in the same year that major exporters eliminate export restrictions. The fundamentals are grinding us down, one WASDE revision at a time.
The Box-o-Rox remains in "Execute incremental sales" mode, set there on November 21 and showing no signs of needing adjustment. The indicator runs on a calendar year marketing cycle, with northern hemisphere producers about to begin new crop sales for harvest 2025.
We're not looking at corn or soybeans for sympathy. Corn is down about a dime since December 2nd highs, beans are off 6.8% since November 17. The entire grain complex is feeling the weight of abundant global supplies.
The chart patterns show room underneath before we truly test the long-standing lows established in October. We're hovering at the doorstep, not crashing through it yet. But the psychological resistance of that $4.93¾ level is nearby. If peace talks progress and Black Sea exports surge, we may find out what's under that floor.
Prudent marketing remains critical. The multi-year price lows already established continue to be reinforced. This isn't a market where you wait for better prices – it's a market where you execute a disciplined, incremental sales strategy and watch the trendline boundaries for new behavior. There are trade tools that can assist with reducing the ongoing risk of being perpetually long wheat. Call your merchant and review strategies for 2025 crop.
The fundamentals aren't likely to improve until we see some evidence of reduced global acreage or weather-induced production losses. Neither is on the radar yet. Southern hemisphere harvests are proceeding under favorable conditions. Black Sea crop has entered dormancy and needs substantial winter precipitation to improve prospects, but Europe is benefiting from recent rainfall. It's an orderly, well-supplied global wheat market – which is exactly what producers don't need right now.
Stay tuned. We're watching for any headline that might inspire the buyers who are present but not yet organized. Five-year lows have a way of eventually attracting bargain hunters. First we have to find the actual floor, while keeping your head up.
Tuesday, December 16, 2025: Pre-Dawn
Natural Gas has declined 24% over the last seven sessions due to seasonally warmer weather, reducing heating demand.
Diesel is still reaching for its mid-October low, now less than a nickel below current trading early Tuesday morning. The trade is talking about a continued decline into the new year. We will be watching, as crude oil prices are challenging their 3-year lows and natural gas is retreating from its recent spike high on December 5th, largely driven by warm heating season temperatures.
The U.S. Dollar Index is now down -1.58% for the month of December to date. This is a part of the good export results that represent the best supportive factor for wheat prices in the current trade.
The pressure is on for a settlement between Russia and Ukraine, which would have a price-negative effect on global wheat prices (and oil – see above). If the movement toward a “peace deal” falters, the cost of shipping on the Black Sea will create a choke-point for trade of energy and food in the region.
U.S wheat export inspections revealed 488,025 metric tonnes (17.93 million bushels) of U.S. wheat shipped in the week of December 1, about 23.2% above last week and 61.38% larger than the same week last year. The marketing year total is now 14.124 million tonnes (425.42 million bushels) of wheat loaded out of U.S. ports, 21.9% above lasts year’s pace.
Argentina is beginning wheat shipments to China and is likely to be the price-setter for global wheat exports in coming months (Argentina is capable of dominating the global wheat export trade as they did in their pre-socialist period).
The Commodity Futures Trading Commission’s (CFTC) Commitment of Traders (COT) reports are catching up, now revealing a dramatic reduction in net short-sold positions in wheat futures that occurred in late November, coinciding with the recent wheat price surge. The current reduction in net short-sold positions has spent a big chunk of the market’s potential pool of rocket fuel, opening the door to a re-establishment of big spec shorts.
The early hours of trade just after midnight Tuesday morning showed a bad attitude, with a downward shot of 5 cents under Monday’s close, but by about 1:30 AM, the market was clawing back up toward unchanged. There are buyers, they just aren’t very organized yet. It will take a headline or two to inspire them. We are not looking to soybeans or corn for much sympathy price support, but they were both holding stead early Tuesday AM.
The one-month trendline in wheat futures prices is downward, with or without an obvious mandate beyond an over-used bearish supply story, but the charts still have room underneath before another test of the long-standing lows. We will just keep watching the boundaries for new behavior.
Stay tuned, its worth money.
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Good hunting!
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