Wheat Futures on CBOT Remain an Uninspiring Story, Aggravated by Elevated Shipping Risk in Red Sea

On Friday, January 19, commodities traders saw a notable rise of wheat futures in Chicago Board of Trade (CBOT) due to an increase in demand for global exports and deliberate technical purchases. The CBOT March wheat contract, also known as WH24, ended the day with a 7-¾ cent increase, reaching a settlement of $5.93-¼ per bushel. Despite this encouraging developments, the week concluded with a slight 0.5% price decrease, marking the third consecutive week of decline for CBOT wheat futures.

On Thursday, the WH24 contract, which serves as a benchmark for the market now, experienced a significant drop, hitting $5.73-¼. That marked the lowest price for the futures that have been traded most actively since November 29. The decrease highlights the current difficulties that CBOT wheat has been grappling with, adding to the downward trend that has been evident over the course of the week.

Waning market momentum was also impacted by a report from the U.S. Department of Agriculture (USDA) detailing U.S. wheat export sales in 2023–24. Figures for the week to January 11 were particularly strong, totaling 707,600 tons. That beat analysts' expectations, which had forecast export sales of between 150,000 tons and 500,000 tons.

Meanwhile, global shipping dynamics also played a role in shaping the wheat market landscape. Recent attacks on shipping vessels in the Red Sea have led to a significant increase in the diversion of grain cargo around the Cape of Good Hope, away from the traditional route through the Suez Canal. Changes in shipping routes have brought new considerations and challenges to grain transportation, and have also made the wheat market more complex.