US Wheat Review on Thursday: Sags on profit-taking, setback from gains

 

 

U.S. wheat futures stumbled Thursday on profit-taking and ideas the markets were short-term overbought following recent rallies, traders said.

 

Chicago Board of Trade December wheat ended down 8 cents at US$5.05 per bushel. Kansas City Board of Trade December wheat lost 6 cents to US$5.18, and Minneapolis Grain Exchange December wheat sank 10 cents to US$5.31 1/4.

 

Wheat was due to retrace some its rallies after climbing on short-covering and technical buying, traders said. CBOT December wheat Wednesday rose to a 10-week high before closing with only slight gains.

 

Commodity funds Thursday sold an estimated 3,000 contracts at the CBOT. Fund buying and short-covering had helped wheat rise during the past two weeks, as large world supplies remain fundamentally bearish, an analyst said.

 

Non-commercial speculative funds continue to hold a large net short position in CBOT wheat, which leaves the market vulnerable to more short-covering, a trader said. However, short-covering rallies seem to have run their course, said Jerry Gidel, analyst for North America Risk Management Services.

 

"If we're going to get some more enthusiasm to the upside, I think we're going to have to find some bullish news," he said.

 

CBOT December wheat hit a session low of US$4.96 1/4 in electronic trading. There are likely sell stops lurking below US$5, an analyst said.

 

Thursday's downside price action didn't produce technical chart damage, but strong follow-through selling pressure Friday "would likely produce a bearish weekly low close and would also hint that a near-term market top is in place," a technical analyst said. Bulls need to close CBOT December wheat above US$5.29 to gain fresh upside momentum, he said.

 

 

Kansas City Board of Trade

 

KCBT December wheat closed above its session low of US$5.11, which was hit in electronic trading.

 

Wheat slumped in a setback from its recent strength amid spillover pressure from other markets. Nearby contracts in CBOT corn and soy closed with double-digit losses.

 

There was a lack of supportive fundamental news for wheat, a trader said. Egypt in a tender bought French wheat and snubbed the U.S.

 

 

Minneapolis Grain Exchange

 

MGE December wheat closed above its session low of US$5.26 1/2. The market backpedaled from recent gains, along with CBOT and KCBT wheat, traders said.

 

Traders are waiting for the U.S. Department of Agriculture to issue weekly U.S. wheat export data at 8:30 a.m. EDT (1230 GMT) Friday, one day later than usual due to Monday's Columbus Day holiday. Export sales are expected to be 400,000 tonnes to 600,000 tonnes.