US Wheat Review on Tuesday: Settles mostly lower after early rally

 

 

U.S. wheat futures finished mostly lower Tuesday as a short-covering rally evaporated amid pressure from other markets.

 

Chicago Board of Trade December wheat ended down 1/2 cent at US$4.98 3/4 per bushel. Kansas City Board of Trade December wheat closed up 1 1/2 cents at US$5.20 1/2, and Minneapolis Grain Exchange December wheat fell 1 1/4 cents to US$5.49.

 

Wheat was stronger for most of the day session but stumbled in late dealings amid losses in neighboring CBOT corn and in deferred soys, traders said. Commodity funds sold an estimated 1,000 wheat contracts at the CBOT.

 

Before pulling back, CBOT December wheat in electronic trading hit US$5.16 1/2, a high for the past 10 days. The contract ended closer to its electronic session low of US$4.94.

 

Analysts continue to cite large global supplies and competition for export business as bearish fundamentals. It is harder for U.S. wheat to be competitive for export business if prices rise, they said.

 

The markets should find some direction Wednesday from the results of a tender from Egypt's state-owned wheat buyer, the General Authority for Supply Commodities, traders said. GASC said it was tendering to buy 55,000 to 60,000 metric tonnes of wheat on a free-on-board basis, although it often tenders for that amount and buys more.

 

Last week, GASC bought 270,000 tonnes of wheat, including 120,000 tonnes of U.S. soft red winter wheat, in a tender. It filled the rest of the tender with French, Russian and Canadian wheat.

 

 

Kansas City Board of Trade

 

KCBT wheat trimmed gains after climbing earlier in the session on short-covering, a floor trader said. There was "nothing really new" that emerged as a fundamental factor after the opening bell, she said.

 

Traders continue to watch the weather in the Southern Hemisphere amid expectations for drought that would lower Argentina's production and export potential. There are worries that Australia could lose some bushels due to dryness, but the losses would have to be severe to spark a fundamental rally in the market, a trader said.

 

KCBT December wheat hit a session high of US$5.39, its highest price since the contract hit US$5.41 1/4 in electronic trading on Aug. 13.

 

 

Minneapolis Grain Exchange

 

MGE December wheat hit a session high of US$5.66, its highest price since Aug. 14.

 

The market should feel pressure from U.S. spring wheat harvest progress, unless demand for high protein wheat shows up, an analyst said. The crop was 22% cut as of Sunday, down from the average of 66%, according to the U.S. Department of Agriculture. Late planting and cool summer slowed development of the crop and delayed the start of harvest.

 

The USDA trimmed its good-to-excellent rating for U.S. spring wheat to 72% from 74% last week. However, traders said the crop is still in good condition.