Euronext Wheat: Funds Net Long at 2022 Highs
Funds took their long position to 144,577 lots on Euronext wheat, the highest since June 2022, as the price fell back below €228/t. A read of the positioning, the geopolitical backdrop and the levels to watch.
Funds moved to a net long of 144,577 lots on Euronext wheat, against 111,938 lots last week. The move came both from buying 22,078 long contracts and from covering 10,560 shorts.
It is the largest net long since June 2022, the previous peak dating from 5 June 2024 at 131,183 lots.
Longs reach 376,468 contracts, a level never seen in the series, while shorts fall back to 231,892 contracts.
For the record, funds were still net short by 9,728 lots on 3 July. They flipped net long on 10 July at 23,588 lots. In two weeks, long exposure has been multiplied by six.
On the commercial side, the net short narrows from 146,085 to 110,558 lots, a covering of 35,527 short contracts over the week.
On the chart, Euronext September wheat closed yesterday at €227.75/t on an indecision candle, back to where it stood two weeks ago after the high tested above €240/t in the middle of last week. Rouen delivered follows, at €223/t as at 29 July.
The correction is not fundamental, it is geopolitical. Attempts at de-escalation in the Black Sea and the Middle East triggered
profit-taking, with crude as the tell. Except that nothing is signed.
Zelensky and Trump met yesterday without a deal, fresh strikes on grain vessels were observed in the Black Sea, and WTI is rebounding late in the day to $85.8/bbl after Iran boarded three tankers in the Strait of Hormuz, against a backdrop of joint US-Saudi strikes on pro-Iranian militias in Iraq.
The risk premium came out of the price before the risk came out of the market.
The euro is trading around 1.1390 against the dollar. The Fed delivers its decision tonight and this is Kevin Warsh's second FOMC; the tone will be scrutinised more closely than the decision itself.
To be continued...