Fund liquidation weighs on grain and livestock markets, but supply concerns remain

By Mike Zuzolo, Global Commodity Analytics & Consulting LLC

If the recent sell-off in crude oil and wheat was driven by investment funds believing supply concerns had eased and demand rationing was no longer necessary, I will be watching closely to see whether the market reassesses that outlook as we move into July.

As discussed in previous columns, soft red winter (SRW) wheat and West Texas Intermediate (WTI) crude oil have shown a strong positive price relationship. Since late 2025, the four-week rolling correlation between the two markets has been positive every week except two, and at the time of this writing, the correlation remains around +75%.

In my view, there are fundamental reasons for this correlation. The most recent USDA WASDE report showed another reduction in U.S. wheat yield projections for 2026-27 wheat production, lowering expected ending stocks to 744 million bushels. Similarly, the U.S. Energy Information Administration reported Strategic Petroleum Reserve crude oil stocks at their lowest level since 1983, at 349.2 million barrels.… Continue reading