US Wheat Review on Tuesday: Weather concerns sustain rally
Wheat markets closed between 18 and 25 cents higher Tuesday, as players try to gauge how global weather patterns will ultimately affect crops.
At the Chicago Board of Trade, the July wheat contract closed up 21 3/4 cents at US$8.98 1/4 a bushel. The Kansas City Board of Trade's July wheat contract added 18 cents to US$9.39 a bushel, while the Minneapolis Grain Exchange's September contract jumped 25 cents to US$10.90.
"Big wheat crops are no longer getting bigger, which is pushing end-user demand and ultimately pushed us higher today," a KCBT wheat trader said.
Argentina's farmer strike and less-than-ideal growing weather reports in Australia and Argentina are adding to production concerns, the trader said.
"It's too early to worry about Australia," a CBOT trader said.
But "stocks are looking tight," the trader said.
A Kansas State plant pathologist released a report Tuesday afternoon indicating head scab is surfacing in eastern and central Kansas, stoking concerns about hard red winter wheat crop quality.
Funds bought 2,000 contracts at the CBOT.
Kansas City Board of Trade
While the wheat markets remained surprisingly strong, most of the action in Kansas City was seen in electronic trading, another KCBT floor trader said.
The trader said there's "no real strong answer" about the source of the rally.
Rain is falling at the wrong time for many Kansas wheat farmers, but even though they're losing some quality, farmers are still saying it's going to be a good harvest, the trader said.
Minneapolis Grain Exchange
Tuesday's wheat rally struck an MGE trader as "counter-intuitive," considering the improved crop conditions suggested by the U.S. Department of Agriculture Crop Progress Report.
"Things should be selling off, but some of this is short covering," the trader said. "We were originally up on corn, but today wheat seemed to be the leader."
A Japanese tender offer should add to some exports sales, the trader said.
