US Wheat Review on Tuesday: Rallies on weak dollar, turnaround

 

 

Weakness in the dollar boosted U.S. wheat futures Tuesday as the markets recovered from recent losses ahead of the release of government crop reports.

 

Chicago Board of Trade July wheat ended up 15 3/4 cents at US$6.13 3/4 a bushel. Kansas City Board of Trade July wheat closed up 12 3/4 cents at US$6.65 1/2, and Minneapolis Grain Exchange July wheat surged 24 3/4 cents to US$7.43.

 

The markets rose in a "Turnaround Tuesday" scenario as commodity funds returned as buyers, traders said. Funds bought an estimated 5,000 contracts at the CBOT.

 

The drop in the dollar was supportive after strength in the dollar pressured prices Monday, a CBOT floor trader said. CBOT July wheat recovered part of the 23 cents it lost in the selloff Monday.

 

There was positioning ahead of U.S. Department of Agriculture crop reports due 8:30 a.m. EDT Wednesday, analysts said. Traders don't expect to see bullish reports for wheat, but U.S. corn and soy ending stocks are expected to tighten, they said.

 

Wheat was partly "being pulled up into the vacuum of what beans and corn are expecting" from the USDA Wednesday, said Tim Hannagan, analyst for Alaron. Once the USDA reports are issued, the markets will "turn the page and they'll be back to the outside markets as being leading indicators again," he said. CBOT corn and soybeans ended higher.

 

 

Kansas City Board of Trade

 

Supportive outside markets, including the sinking dollar and gains in crude oil, lifted KCBT wheat, traders said. There was "positioning and posturing" going into the USDA crop reports, an analyst said.

 

The average of analysts' estimates for total winter wheat production is 1.496 billion, compared to the USDA's May estimate of 1.502 billion, according to a survey of 12 analysts. The average of analysts' estimates for HRW wheat production is 871 million bushels, unchanged from the USDA's May estimate.

 

 

Minneapolis Grain Exchange

 

MGE wheat led the upside. September wheat, which represents the new hard red spring wheat crop, ended up 20 1/4 cents at US$7.40 1/4.

 

The USDA, in its weekly crop progress report Monday, said U.S. spring wheat was 96% planted, down from the average of 100%. Planting was 94% complete in North Dakota, the top spring wheat-producing state, compared to the average of 99%.

 

It is "more or less reasonable to assume" growers won't plant any more from now on, a market analyst said. It is a fairly significant knock on plantings if the final 5% or so of acres goes unseeded, he said. Spring wheat could potentially face "supply disruptions" if it is hit with unfavorable summer weather, he said.

 

The USDA reports are "probably going to be neutral to bearish for wheat in general," the analyst said. A recent run-up in prices has outstripped demand, he said.