US Wheat Review on Monday: Finishes mostly higher in bounce

 

 

U.S. wheat futures closed mostly higher Monday in a modest bounce from recent losses, with positioning expected to be a feature Tuesday in front of key crop reports.

 

Chicago Board of Trade September wheat ended up 4 3/4 cents at US$4.94 1/4 a bushel. Kansas City Board of Trade September wheat ended unchanged at US$5.25 1/4, and Minneapolis Grain Exchange, or MGEX, September wheat finished up 1 3/4 cents at US$5.75.

 

Short covering and positioning helped support prices, although the markets trimmed gains before the close, traders said. Noncommercial speculative funds held a large net short position of 50,378 contracts in CBOT wheat as of this past Tuesday, up from 49,838 contracts a week earlier, according to supplemental reports from the Commodity Futures Trading Commission.

 

Wheat looked oversold and due for a bounce after CBOT and KCBT September wheat set contract lows last week, traders said. "They've beaten up on this wheat," said Jason Britt, president of Central States Commodities.

 

Wheat also was keeping an eye on CBOT corn, which ended firmer but off its highs. The grains are linked because funds often trade in a basket of commodities and because both can be used for animal feed.

 

CBOT September wheat seemed to run "into a little bit of a brick wall of resistance" at US$5, its open outcry session high, Britt said. Large world supplies and sluggish export demand remain fundamentally bearish, traders said.

 

Strength in the U.S. dollar also may have helped keep a lid on wheat, Britt said. A firm dollar is normally seen as bearish because it makes U.S. wheat less attractive to foreign buyers.

 

Commodity funds bought an estimated 3,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

KCBT wheat finished unchanged as the market stabilized a bit after falling hard last week, a trader said. The market pared gains ahead of the close on positioning and profit taking from the advances earlier in the day, the trader said.

 

"It was pretty much a nonevent, [with] no fresh news," the trader said. "Grain inspections today were light all across. I guess it's a small victory we didn't see further weakness."

 

Traders are waiting for the U.S. Department of Agriculture to issue crop production and global supply/demand reports at 8:30 a.m. EDT Wednesday. The data is considered more important for corn and soy than for wheat, but adjustments to corn and soy estimates could influence wheat, traders said.

 

 

Minneapolis Grain Exchange

 

MGEX wheat closed higher in a bounce from weakness last week.

 

The USDA's estimates on spring wheat and durum production will be the focus of reports for the wheat markets, as winter wheat production is "pretty well-defined," an analyst said. The average of analysts' estimates for production of spring wheat other than durum is 523 million bushels, up from the USDA's July estimate of 506 million, according to a Dow Jones Newswires survey.