US Wheat Review on Monday: Extends losses on firm dollar, technicals

 

 

A strong dollar and technical selling knocked U.S. wheat futures lower Monday amid a broad-based selloff of commodities.

 

Chicago Board of Trade July wheat closed down 9 1/2 cents at US$5.75 1/4 a bushel. Kansas City Board of Trade July wheat ended down 5 1/4 cents at US$6.31 3/4, and Minneapolis Grain Exchange July wheat sank 10 1/2 cents to US$7.22.

 

Wheat felt pressure from widespread selling in commodities, including crude oil, CBOT soys and corn, and in equities, traders said. Commodity funds sold an estimated 3,000 wheat contracts at the CBOT as the dollar rose.

 

CBOT wheat has closed lower for four consecutive sessions. Technical pressure weighed on the market, a trader said, with nearby July wheat settling below its 45-, 50- and 200-day moving averages. CBOT July wheat hit an open outcry session low of US$5.69, its lowest price since May 7, before paring losses.

 

There are ideas wheat is in an oversold condition after recent selloffs. CBOT July wheat is down US$1.00 3/4 from June 1, when it hit an eight-month high.

 

"You tend to wonder, 'Is the liquidation over?'" said Dale Durchholz, analyst for AgriVisor. "If it's over now, what we really need to see now is something new that's negative to perpetuate the weakness."

 

There continue to be concerns that head scab, a fungal disease, will cut into the U.S. SRW wheat crop, Durchholz said. Uncertainty about the size and quality of the crop is creating some "subtle anxiousness" as the winter wheat harvest rolls north, he said.

 

 

Kansas City Board of Trade

 

KCBT wheat closed lower on the firm dollar, as activity in the greenback has become a strong influence on commodities, traders said. The slide in crude oil, equities and the CBOT row crops contributed to the bearish tonnee, they said.

 

The markets are anticipating increased pressure from the U.S. winter wheat harvest, with active cutting in Kansas not too far off, a trader said. The U.S. Department of Agriculture is due to issue an update on harvest progress at 4 p.m. EDT in its weekly crop progress report.

 

 

Minneapolis Grain Exchange

 

MGE July wheat led the downside after seeing more modest losses than the other markets last week. CBOT and KCBT July wheat last week each closed down 38 cents on the week, while MGE July wheat last week closed down 11 cents on the week.

 

MGE September wheat, which represents the new hard red spring wheat crop, on Monday ended down 9 1/2 cents at US$7.16 3/4, a US$1.13 1/4 premium over CBOT July wheat. The premium is reasonable due to the higher protein content in HRS wheat and considering worries about reduced HRS wheat acreage and yields due to late planting.