US Wheat Review on Monday: Markets bounce from losses, follow soy

 

 

U.S. wheat futures closed higher Monday in a small recovery from recent losses supported by a rally in soys, traders said.

 

Chicago Board of Trade December wheat closed up 12 cents at US$4.99 1/4 per bushel. Kansas City Board of Trade December wheat finished 9 1/4 cents higher at US$5.19, and Minneapolis Grain Exchange December wheat rose 6 1/4 cents to US$5.50 1/4.

 

CBOT soys led the upside in the grain markets and lent spillover strength to corn and wheat, traders said. Wheat doesn't have a bullish fundamental story, but the markets were technically oversold and due for a bounce after recent losses, an analyst said.

 

There was some profit-taking by shorts after prices "hit some pretty steep lows last week," said Tim Hannagan, analyst for Alaron. Non-commercial speculative funds hold a large net short position in CBOT wheat, which shows there's potential for short-covering rallies, a trader said.

 

CBOT December wheat last week set fresh contract lows, while September wheat hit an eight-month low for a nearby contract on a monthly continuation chart. CBOT December wheat in open outcry activity Monday traded an "inside day," within Friday's range of US$5.02 to US$4.87.

 

Commodity funds bought an estimated 4,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

Weekly U.S. wheat export inspections of 16.7 million bushels were within expectations of 13 million to 18 million. Otherwise, the demand front was mostly quiet. Importers are filling their needs "hand to mouth" and not buying large quantities to build up reserves, an analyst said.

 

"It's like they show up at the dock, and they fill their pockets and nothing more," Hannagan said. "Demand is there, but it's coming in small pieces."

 

The markets have been looking for a pickup in export demand to offer some support to prices, which have fallen hard this summer. However, there is a lot of competition for export business because the world has large supplies of wheat.

 

 

Minneapolis Grain Exchange

 

Traders are waiting for an update on U.S. spring wheat harvest in the U.S. Department of Agriculture's weekly crop progress report, due out at 4 p.m. EDT. The market will likely feel pressure until "we get the bulk of spring wheat harvest behind us," said Louise Gartner, analyst for Spectrum Commodities.

 

A week ago, the crop was 13% cut, compared with the average of 48%, according to the USDA. Harvest is off to a slow start due to late planting and a cool summer that slowed development.