The fund position across the three wheat futures markets is now a combined short of 95k contracts, but still well below the deepest short they have held of around 150k contracts during 2016-2017 according to Mercantile. The wheat market remains quite complicated, and both bearish and bullish arguments can be made. For example, the bears in the market point to the boundless flow of four million mt (+) per month of wheat from Russia, which is affecting other exporters’ volumes. (EU and U.S. exports down 20-30 per cent on last year.) The Russian private sale outside the usual GASC tender system of almost half a million mt of wheat to Egypt over the weekend only confirms the Russian aggressiveness to just keep selling. On the other hand, Mercantile says the bulls in the market are shifting their attention from the logistic effects of the Russia-Ukraine war to potential Indian wheat imports and by focusing on declines in southern hemisphere production to reduce supplies. The market seemingly awaits confirmation from either (or both) sides before making a definitive move, says Mercantile.
Mercantile will have to see how the trade reacts this week to the additional Russian sales to Egypt outside the usual tender system that happened over the weekend. The drop in OI in U.S. wheat futures and the expanding fund short make U.S. futures increasingly vulnerable to de-linking further from world wheat values.
So, the wheat market remains very complicated, but Mercantile expects it to move higher in the New Year, making storage important.

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