US Wheat Review on Tuesday: Slumps in setback; consolidation seen

 

 

U.S. wheat futures closed lower Tuesday in a setback from earlier gains, with the market seen to be consolidating after recent volatility.

 

Chicago Board of Trade September wheat fell 14 1/2 cents to US$8.45 1/4 per bushel. Kansas City Board of Trade September wheat sank 9 1/2 cents to US$8.80 1/2, and Minneapolis Grain Exchange September wheat slipped 8 cents to US$9.19 1/2.

 

Wheat slumped after rising earlier in the session on the back of a rally in CBOT soybeans, a trader said. Soybeans pulled back from its gains to end in negative territory.

 

Traders were seen to be taking money off the table after a run-up in wheat Monday, an analyst said. Volatility has been high in the grains, with nearby CBOT September wheat trading from a high of US$8.87 last Thursday to a low of US$8.17 on Friday.

 

"After this run-up and the break, now we're kind of consolidating," a trader said. "We traded inside of yesterday's range."

 

CBOT September wheat hit a session high of US$8.71 and a session low of US$8.42. On Monday, the contract saw a high of US$8.75 and a low of US$8.30 1/2.

 

The market might look "a little negative" based on the lower close, a trader said. However, "probably there's a little bit of support right below where we ended up today," he said.

 

Indeed, CBOT September wheat remains above key technical levels, including its 45-, 50- and 100-day moving averages. The nearby contract closed below its 200-day moving average around US$8.62.

 

There was not much fresh fundamental news out for the wheat markets to digest. Wheat will likely keep an eye on the neighboring markets "until we develop more export news," said Larry Glenn, broker/analyst for Frontier Ag.

 

 

Kansas City Board of Trade

 

KCBT September wheat traded an inside day, with a session high of US$9.02 and a low of US$8.77. On Monday, the contract traded in a range of US$9.07 1/2 and US$8.71.

 

Similar to CBOT September wheat, the nearby KCBT contract closed above its 45-, 50- and 100-day moving averages, a floor trader said. The 100-day moving average was around US$8.80.

 

"We're kind of trading in sideways," the trader said. "We're still trading above all the major moving averages. We're just going to kind of consolidate it"

 

The market could see some follow-through selling overnight and some weakness tomorrow after the weaker close, the floor trader said. The market will continue to be influenced by corn, crude oil and the U.S. dollar.

 

 

Minneapolis Grain Exchange

 

MGE September wheat ended above its 45-, 50- and 100-day moving averages. The 100-day moving average was just below the closing price of US$9.19.

 

The nearby contract hit a session low of US$9.15, below its Monday low of US$9.18. The session high of US$9.35 was below Monday's high of US$9.52.

 

The U.S. Department of Agriculture said 35% of the U.S. spring wheat crop was harvested as of Sunday, up from 16% the previous week but below the five-year average of 54%. Spring wheat's good-to-excellent condition rating for the crop rose 3 percentage points to 56%, according to the USDA.