Wheat After Nine Straight Weekly Losses: Why the Short-Covering Case Points to $6.50

Wheat has now fallen for nine consecutive weeks. Chicago soft red winter wheat for December delivery settled at 598.50 cents a bushel on 4 November, hovering just above $6.00 and near a four-month low, while Paris milling wheat sits near €228 a tonne after its own ninth straight weekly loss. The market's verdict looks unanimous: too much grain in the world, too little demand for it, and no reason to own it. I think the unanimity is the opportunity.

Start with positioning, because that is where this trade actually lives. Managed money is now net short every US wheat class, with the Chicago short alone running to roughly 75,000 contracts. When everybody who wants to sell has already sold, the marginal seller is exhausted — and a market that crowded on one side does not need good news to rally, only the absence of fresh bad news. The technical picture agrees: December wheat bounced off support near $5.90¾, and Reuters' technical analysis notes it may retest resistance at $6.05, with bullish divergences on the hourly MACD pointing to a further bounce. Nobody has to believe in a wheat shortage for this to work. They only have to stop selling.

The weather, meanwhile, is quietly turning against the bears. The US National Oceanic and Atmospheric Administration maintains an El Niño advisory, with a strong to very strong event likely through January to March 2027 at better than 83% odds, and Australia's Bureau of Meteorology expects the warming to peak around November or December. Rain of 25 to 50 millimetres is forecast across Australia's eastern cropping regions just as harvest ramps up, threatening sprouting and mould in standing wheat and barley. In the United States, the first winter wheat condition ratings of the season came in at 44% good to excellent, against trade expectations of 50%. In Russia, the agriculture ministry has cut its winter sowing plan for the 2027 harvest to 19 million hectares as southern growers sow into dry soils, and attacks in the Black Sea continue to disrupt the region's export logistics. None of this is a supply shock yet. But a market priced for endless abundance is vulnerable to even a small one.

I am only at 40% on this, and the other side deserves a fair hearing. Russian wheat exports, while still below last year's levels, have begun to recover, and Paris futures fell €3.00 a tonne on 3 November as that recovery showed up in the data. The Euronext curve is almost flat — December 2026 near €228 a tonne, with contracts out to mid-2028 clustered between €227 and €235 — which is the shape of a market that believes European balance sheets are comfortable for a long time. US export sales remain sluggish, and wheat is not suffering alone: corn lost roughly 10% in October, its worst month since June 2023, and soybeans are testing support near $12.30 a bushel. The futures curve itself prices only a gentle grind higher — December near 600 cents, March 2027 at 609.50, July 2027 at 622.50 — so $6.50 before the December contract expires on 14 December is a genuinely contrarian call, about 8% above where the market trades today. It is well inside the 52-week range of $5.02 to $7.76, but the market would have to move a long way in five weeks.

What would change my mind is straightforward: a clean break below the $5.90¾ support, or a week of heavy Russian export loadings that confirms the Black Sea is back to full flow. Either would tell me the shorts were right and the weather noise was just noise. But if a short-covering squeeze fires — one fund deciding it would rather buy back than wait out an El Niño winter — $6.50 arrives fast. Wheat has a habit of moving that way: nine quiet weeks down, then a violent week up. I am betting the next violent week points up.