HRW Wheat Futures - COT Report (Week Ending 2025-12-23)

Executive summary

This report covers positioning in the HRW Wheat futures market for the week ending December 23, 2025. The most significant development was a sharp increase in bearish sentiment from speculative funds. Managed Money added over 14,000 new short contracts, substantially increasing their net short position. This occurred alongside a significant surge in total open interest, suggesting new capital is actively establishing bearish views. In contrast, Commercials (Producers/Merchants) reduced their net short hedge, primarily by covering existing short positions. The lack of prior weeks' data prevents a comparison to historical extremes, but the week's flows point to a clear divergence between deeply bearish speculators and less-bearish hedgers.

Positioning

Net positions for major categories as of December 23, 2025:

• Managed Money (Speculators): -26,609 contracts net short (62,013 long vs. 88,622 short). This is a significant net short stance.
• Producer/Merchant (Commercials): -49,671 contracts net short (42,439 long vs. 92,110 short). This reflects their typical role as hedgers of physical production.
• Swap Dealers: +64,106 contracts net long (67,151 long vs. 3,045 short). They hold the primary long exposure, likely as a counterparty to commercial and speculative shorts.
• Other Reportables: +15,551 contracts net long (23,497 long vs. 7,946 short).
• Nonreportable (Retail): -3,377 contracts net short (16,594 long vs. 19,971 short).

Note: With no historical data provided in prior_cot_weeks, it is not possible to determine if these positioning levels are at or near multi-week extremes.

Flows and week-over-week changes

The reporting week saw a substantial increase in market participation and a clear shift in sentiment among key groups:

• Managed Money: Showed strong bearish conviction. They aggressively added new shorts (+14,330 contracts) while adding a much smaller number of new longs (+5,449 contracts). This gross positioning change was the dominant driver of the market's positioning shift.
• Producer/Merchant: Reduced their net short position. This was driven by a significant reduction in short hedges (-5,949 contracts) alongside a modest addition of new longs (+1,429 contracts). This suggests producers were either taking profit on hedges or see less need to hedge at current levels.
• Open Interest: Total open interest surged by 15,425 contracts, indicating that the week's activity was driven by new positions being opened rather than existing positions being closed or transferred.

Commercials vs speculators

The classic dynamic between hedgers and speculators is clearly visible:

• Commercials (Producers/Merchants) hold a large net short position of -49,671 contracts, fulfilling their role as hedgers against falling prices for their physical product. However, their decision to cover over 5,900 short contracts this week is a notable counter-signal to the speculative flow.
• Speculators (Managed Money) are also positioned net short (-26,609 contracts) and deepened this bearish bet significantly during the week. The divergence is stark: as speculators sold heavily, commercials were buying back their hedges.

Open interest and participation

• Total Open Interest: Stood at 291,715 contracts, a robust increase for the week.
• Market Share:
  • The short side of the market is almost evenly split between Commercials (31.6% of total shorts) and Managed Money (30.4% of total shorts).
  • The long side is led by Swap Dealers, who hold 23.0% of all long positions, followed by Managed Money at 21.3%.
• Concentration: The market shows moderate concentration. The 4 largest traders control 10.8% of the net short position, and the 8 largest traders control 18.4%. This does not indicate an overly concentrated or cornered market.

Price context

The provided price series is extremely limited, containing only a single data point: * December 23, 2025 Close: 528.25

Without a price history for the reporting week, it is impossible to determine whether the aggressive short-selling from Managed Money was a reaction to falling prices or an attempt to initiate a price decline. However, the strong increase in open interest combined with a large build in net speculative shorts is a structurally bearish setup as of the report's as-of date.

Risks and watchpoints

• Crowded Speculative Short: The large and rapidly growing Managed Money short position (-26,609 contracts) is the primary feature of this market. While it reflects strong bearish sentiment, it also creates a significant risk of a sharp short-covering rally if market fundamentals or sentiment were to shift unexpectedly.
• Commercial Buying: The reduction in producer short hedging is a key watchpoint. If this trend continues, it could signal that commercial players, who have intimate knowledge of the physical market, believe prices may be finding a floor.
• Data Gap: The analysis is based on a single week of data. Future reports are needed to establish trends and determine if current positioning levels are stretched relative to historical norms.