US Wheat Review on Monday: Rallies on technical buying, spillover
U.S. wheat futures rallied Monday in a rebound from a sell-off Friday, with support from sharp gains in the row crops and weakness in the U.S. dollar.
Chicago Board of Trade September wheat surged 35 1/2 cents to US$8.59 3/4 per bushel. Kansas City Board of Trade September wheat jumped 26 3/4 cents to US$8.90, and Minneapolis Grain Exchange September wheat rose 15 1/4 cents to US$9.27 1/2.
Wheat followed CBOT corn and soybeans "to a large degree," as the neighboring markets soared, said John Kleist, analyst/broker for Allendale. CBOT November soybeans climbed the daily, exchange-imposed limit of 70 cents to US$12.89, while December corn closed 23 1/4 cents higher at US$5.72 3/4. Weakness in the U.S. dollar boosted the grains and soybeans after a firm greenback pressured commodities Friday, a CBOT floor analyst said.
Short-covering and technical buying after Friday's slide also helped carry wheat higher, traders said. Non-commercial speculative funds cut short CBOT wheat futures and options positions by 2,707 contracts, leaving them net short 22,830 contacts as of Aug. 12, the Commodity Futures Trading Commission said in a supplemental report Friday.
There was not much fresh fundamental news for wheat bulls to get excited about, an analyst said. U.S. wheat export sales have been solid lately, but price increases seem to shut off demand, he said.
Weekly U.S. wheat export inspections for the week ended Aug. 14 were 36.278 million bushels, above trade estimates of 28 to 33 million bushels, according to the U.S. Department of Agriculture. Moving forward, market participants will continue to keep an eye on other markets and the U.S. dollar, traders said.
"I think it's more technical than anything," Tom Leffler, owner of Leffler Commodities, said about the rally. "I just can't hang my hat on anything else out there."
Kansas City Board of Trade
Strength in CBOT corn and soybeans pulled KCBT wheat higher, a trader said. The sell-off Friday was overdone, and the markets were due for a recovery, he said.
However, it seemed as though the move to upside was overdone too, the trader said. Volatility continues to be a factor in the markets, he said.
There are some concerns about dryness in Southern Hemisphere growing areas. Argentina and Australia could both use a drink of water to boost their wheat.
Minneapolis Grain Exchange
MGE wheat saw the most conservative gains on the day, compared to the CBOT and KCBT. Nearby September wheat closed 24 1/2 cents off its session high of US$9.52.
The market was a follower of the CBOT, a trader said. Traders are waiting to see the USDA's weekly crop progress report, due out at 4 p.m. EDT, to find out how much the spring wheat harvest progressed last week.
Harvest was 16% complete as of Aug. 10, down from the average of 36%. Rainy weather delayed cutting again in some areas last week.