Heading into the final quarter of the 2025/2026 marketing year for wheat, it’s crucial to assess the possibility of a rally to finish marketing old-crop supplies and potentially secure price floors for the new crop.
Winter wheat is entering an important weather period, when the risk of freeze damage is typically at its highest, potentially affecting final yield. A close look at the timing and performance of past winter wheat rallies underlines the crucial role played by the weather during this period.
Rallies tend to occur most often in early February, and follow a mostly linear trend of declining as threat of cold temperatures inflicting winterkill on the crop fades.
Estimates from USDA indicated damage to the crop was relatively mild from the strong winter storm that swept across most of the U.S. in the past week. Kansas, which accounts for nearly a quarter of current winter wheat acreage, saw a 1% improvement from last month’s good to excellent rating. The top five winter wheat states by acreage saw a net decline of 7 points in those categories. Compared to last year’s February report, those five states saw a drop of 82 points in the good to excellent category, mainly driven by a 51-point loss in Montana due to poor snow cover.
Current estimates for winter wheat acres in the good to excellent categories are 61% for Kansas and 19% for Montana
While weather is a timely story, wheat is also susceptible to price action driven by geopolitics, as seen in the massive 2022 rally that followed Russia’s invasion of Ukraine. However, with fighting ongoing and multiple flare-ups failing to rally wheat in recent months, it seems unlikely that the market would adjust for anything short of intense and long-lasting logistics disruptions or substantial crop damage.
The lack of weight given to recent geopolitical flare-ups, along with a quiet market reaction to the lower condition ratings compared to last year, indicate a rally may be hard to come by in the final quarter of the year. And if it does occur, it may be on the mild side, as seen since 2022.
We’ll keep a close eye on any short-lived rallies in the wheat market, on the lookout for selling opportunities given the lack of fundamental support for a long-term price uptrend.