US Wheat Review on Monday: Jumps on short-covering, technical bounce

 

 

Short-covering pushed U.S. wheat futures sharply higher Monday as the markets recovered from an oversold condition.

 

Chicago Board of Trade September wheat climbed 24 cents to US$5.42 3/4 a bushel. Kansas City Board of Trade September wheat jumped 23 1/2 cents to US$5.71, and Minneapolis Grain Exchange September wheat gained 18 1/2 cents to US$6.21 1/4.

 

The markets were overdue for a technical bounce following steep recent sell-offs, traders said. As of Friday's close, CBOT September wheat had fallen US$1.83 1/4 from its June 1 intraday high of US$7.02 a bushel.

 

"Wheat has been in a situation where we've been consistently going down," said Dale Durchholz, an analyst for AgriVisor. "We can have a fairly good little rally on short-covering alone."

 

Non-commercial speculative funds held a large net short position of 50,363 contracts in CBOT wheat as of July 7, according to a supplemental Commodity Futures Trading Commission report. Commodity funds on Monday bought an estimated 4,000 contracts at the CBOT.

 

There are ideas that demand for U.S. wheat could pick up after a slow start to the marketing year. It was encouraging that Egypt, a price-conscious buyer, booked small amounts of U.S. wheat in two recent tenders, Durchholz said. However, weekly U.S. wheat export inspections of 9.628 million bushels were below trade expectations of 12 million-20 million.

 

"It looks like buyers are somewhat short on their forward coverage," Durchholz said. "There's a lot of potential latent buying once these people feel harvest lows are in place."

 

 

Kansas City Board of Trade

 

KCBT wheat closed higher in a technical rebound from recent losses, traders said. KCBT September wheat jumped above its 10-day moving average around US$5.62. CBOT and MGE September wheat also rose above their 10-day moving averages.

 

There was a lack of fresh fundamental news to spur the rallies, traders said. The markets continue to watch for signs of stronger global demand, but business remains lackluster, a trader said.

 

U.S winter wheat harvest is expected to be 65% to 70% complete in the U.S. Department of Agriculture's weekly crop progress report, up from 56% last week, analysts said. The report is due out at 4 p.m. EDT.

 

 

Minneapolis Grain Exchange

 

MGE wheat ended solidly higher in a technical bounce but trailed gains at the other markets.

 

Good-to-excellent ratings for spring wheat in the crop progress report are expected to be unchanged to 2 percentage points lower, analysts said. A week ago, 72% of the crop was rated good to excellent.