US Wheat Review on Monday: Ends up, bounces from Friday's losses

 

 

U.S. wheat futures rose Monday in a recovery from steep losses Friday, although uncertainty persisted about potential changes to the Chicago Board of Trade storage rate system.

 

CBOT December wheat closed 6 cents higher at US$4.55 3/4 a bushel. Kansas City Board of Trade December wheat was up 5 3/4 cents at US$4.75, and Minneapolis Grain Exchange December wheat was up 1 1/2 cents at US$4.88 1/4.

 

The market was oversold and due for a bounce after CBOT December wheat dropped to a contract low Friday, traders said. There was a lack of supportive news Monday and no fundamental reason for wheat to rally, traders said.

 

Commodity funds bought an estimated 3,000 contracts.

 

"The wheat market became overdone on Friday's sharp decline," AgResource Company said in a note.

 

The markets are starting to look ahead to the U.S. Department of Agriculture's small grains and quarterly stocks reports, due out Wednesday. Analysts expect the USDA to raise its forecast for 2009-10 U.S. all wheat production from last month. Wheat stocks as of Sept. 1 are projected to be up sharply from a year earlier.

 

Uncertainty about the potential for an overhaul of the storage rate system for CBOT wheat continues to hang over the market. Some holders of long positions have exited the market amid worries about the possibility for implementation of a new storage mechanism with the nearby December contract, traders said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures closed higher in a bounce from Friday's losses, traders said. The market was due for a rebound following the steep slide, they said.

 

After the close of trading, Egypt's state-owned General Authority for Supply Commodities said it was tendering to buy 55,000 to 60,000 tonnes of wheat on a free-on-board basis. Egypt, a major buyer on the world market, is known for being price-sensitive and often buys more than it tenders for.

 

In other export news, weekly U.S. export inspections of 24 million tonnes were above trade expectations of 18 million to 23 million.

 

 

Minneapolis Grain Exchange

 

The USDA will issue an update on the U.S. spring wheat harvest in its weekly crop progress report at 4 p.m. EDT. Cutting has been delayed by late planting in the spring and cool summer weather.

 

Late harvesting should slow in the Canadian prairies and northern U.S. through at least early next week due to rain and unseasonable coolness, according to private weather firm T-Storm Weather. Cutting was 85% complete as of Sept. 20, below the average of 96%, according to the USDA.