US Wheat Review on Thursday: Bounces after slide; fund buying returns

 

 

U.S. wheat futures on Thursday bounced from sharp losses Wednesday in a recovery supported by renewed fund buying.

 

Chicago Board of Trade July wheat rose 17 3/4 cents to US$6.35 1/4 a bushel. Kansas City Board of Trade July wheat climbed 18 1/4 cents to US$6.90, and Minneapolis Grain Exchange July wheat climbed 28 cents to US$7.61 1/4.

 

CBOT July wheat recovered part of its losses after closing down 52 cents Wednesday. Fund buying, stabilizing equities, and gains in crude oil and CBOT soybeans helped support the rebound, traders said. Pressure from outside markets weighed on wheat Wednesday.

 

Commodity funds Thursday bought an estimated 5,000 wheat contracts at the CBOT. They were heavy sellers Wednesday.

 

"Yesterday the sell-off was so severe," said Dave Marshall, an independent marketing adviser and commodities broker. "You've got to think that people came into the market today saying to themselves, 'It looks like markets may have overdone it to the downside.'"

 

The markets trimmed gains ahead of the close. CBOT July wheat hit an open outcry session high of US$6.42 1/2 and traded within Wednesday's range of US$6.15 to US$6.55.

 

The sell-off Wednesday came after nearby U.S. wheat futures hit eight-month highs Monday in a rally that was seen as overdone, traders said. CBOT July wheat would need to move above the area around US$6.80 and hold on to its gains to be in an uptrend, Marshall said.

 

"The fact that we've come down and found some temporary support in here will basically give the bulls and the bears another day to fight it out," he said.

 

 

Kansas City Board of Trade

 

Nothing changed fundamentally to spark the turnaround in KCBT wheat, traders said. There are ideas that world production continues "to be nibbled down around the edges" due to weather issues, including dryness in Argentina and Eastern Europe, Marshall said. However, global wheat supplies are more than enough to meet demand, analysts said.

 

KCBT July wheat closed below its open outcry session high of US$6.97. It traded within Wednesday's range of US$6.69 to US$7.06.

 

 

Minneapolis Grain Exchange

 

MGE wheat led the upside after leading the downside Wednesday. The nearby July contract pared gains after hitting a session high of US$7.74.

 

September wheat, which represents the new spring wheat crop, closed up 24 cents at US$7.63. On Wednesday, it closed down the daily, exchange-imposed limit of 60 cents.

 

There continue to be concerns that spring wheat planting delays will results in reduced acreage and lower yields, analysts said. Cool, wet weather delayed seeding in the northern Plains this season and is slowing development of the crop.