HRW Wheat Futures COT Brief: Week Ending 2026-02-13

Executive summary

This week's report reveals a significant divergence between speculator and commercial positioning amidst a sharp price rally and a substantial drop in overall market participation. Managed Money aggressively increased its net short position, betting on a price decline, even as the market moved higher. Conversely, Commercials (Producers/Merchants) took the other side, covering a large number of short hedges and reducing their net short position to the lowest level in the provided data set. The market saw a significant liquidation of positions, as Open Interest fell by 16,900 contracts, largely driven by an unwinding of spread trades. The price action suggests this was a short-covering rally, a move that speculators faded and commercials used as an opportunity to reduce hedges.

Positioning (net, extremes vs recent weeks)

• Managed Money (Speculators): The net position flipped more bearish, expanding to a net short of -18,012 contracts from -7,777 the prior week. This is the largest net short position since early January and approaches the multi-week extreme of -26,609 contracts seen on December 23.
• Producer/Merchant (Commercials): This group became significantly less bearish. Their net short position shrank to -52,568 contracts from -63,282 contracts. This is the smallest net short position for commercials in the entire 7-week data sample provided, indicating a reduced appetite for hedging at current price levels.
• Swap Dealers: Remained the primary long holder with a massive and relatively stable net long position of +76,127 contracts, a slight increase from +76,052 the previous week.

Flows and week-over-week changes

The market saw a major re-shuffling of positions, characterized by speculator selling and commercial buying. * Managed Money was the largest net seller, offloading a net 10,235 contracts. This was a combination of liquidating longs (-5,674 contracts) and establishing new shorts (+4,561 contracts), a decisively bearish flow. They also unwound a significant 8,231 contracts of spread positions. * Producer/Merchants were the largest net buyers, adding a net 10,714 contracts to their books. This was primarily driven by covering existing short positions (-6,697 contracts), supplemented by adding new longs (+4,017 contracts). * Swap Dealers were relatively quiet on a net basis but saw a large unwind in their spread book (-5,511 contracts), contributing to the overall decline in open interest.

Commercials vs speculators

The classic positioning battle intensified this week with a clear divergence in opinion: * Speculators (Managed Money) are positioned for a price decline. By selling into a rising market, they are expressing a strong view that the recent rally is unsustainable. Their gross short position (83,045 contracts) is now significantly larger than their gross long position (65,033 contracts). * Commercials (Producers/Hedgers) are signaling that current prices are becoming attractive. By covering shorts at the fastest pace in recent weeks, they are reducing their downside price protection. This action often suggests that physical market participants believe the risk of a significant price drop has diminished.

Open interest and participation

• Open Interest (OI): Total market participation saw a sharp decline, with OI falling by 16,900 contracts to 295,884. This is the largest one-week change in the provided data and brings OI to its lowest level since early January.
• Source of OI Change: The decline was heavily influenced by a major liquidation in spread positions across Managed Money (-8,231) and Swap Dealers (-5,511). This suggests a roll-related or strategy-based unwind rather than a simple directional exit from the market.
• Concentration: Market concentration remains moderate. The four largest traders account for 11.8% of the net long and 10.4% of the net short positions.

Price context

The positioning changes occurred during a bullish week for HRW Wheat prices. * The front-month contract, as per the provided price series, closed at 536.5 on the previous report's date (Feb 6) and rallied strongly to close at 552.75 on this report's date (Feb 13). * The fact that prices rallied sharply while overall open interest fell is a classic technical sign of a short-covering rally. * The flow data confirms this dynamic: Commercials were significant short-coverers, likely providing fuel for the rally, while Managed Money attempted to fade the move by adding new short positions into strength.

Risks and watchpoints

• Speculator vs. Commercial Divergence: The primary watchpoint is the stark conflict between Managed Money adding shorts and Commercials covering them. Such divergences often precede significant trend continuations or reversals. The resolution of this tension will be key.
• Crowded Speculator Short: The Managed Money short position is growing large again. If the price rally continues, this group is at risk of a short squeeze, which could force them to cover their positions and provide further upward momentum for prices.
• Commercial Behavior: Continued short-covering or new long additions from the Commercial category in subsequent reports would serve as a strong bullish confirmation, suggesting the "smart money" sees further upside or, at a minimum, limited downside.