Spring wheat futures at the Minneapolis Grain Exchange closed mostly lower on Tuesday, shrugging off a decline in weekly crop ratings as speculators liquidated long positions, traders said. The market opened higher but nearby prices plunged within the opening minutes. Sell-stops were hit as front-month September dipped below $5 per bushel.
"There wasn't any follow-through buying," one trader said. MGE September settled 2-1/4 cents lower at $5.00 per bushel after trading between $4.93 and $5.04. Deferred months ended down 4 cents to up 7 cents, with most-active nearby months under pressure.
Commercial buying at the lows underpinned prices. Volume was estimated by the Minneapolis exchange at 6,874 contracts, up from 5,970 lots on Monday. Funds sold 1,000 to 1,200 contracts on the day, traders said. Funds also sold 4,000 lots in Kansas City. Traders were buying Chicago wheat against Kansas City and Minneapolis wheat and CBOT corn, exiting inter-market spreads.
Funds have been heavily net long in those three markets, while traders estimated that funds were net short in CBOT wheat by more than 6,000 lots ahead of Tuesday's session. The sell-off in Minneapolis came in spite of a decline in weekly spring wheat ratings following a week of searing temperatures in the northern US Plains.
The US Department of Agriculture late Monday said 34 percent of the US spring wheat crop was rated in good to excellent condition, down eight points from 42 percent the previous week. Traders had expected a 2- to 5-point drop.
But some traders said the market has already factored in drought-related damage to the crop. MGE futures settled lower on Monday as traders took profits despite weekend temperatures in the Dakotas climbing above 100 degrees Fahrenheit.
Exports were quiet overnight, providing no direction for wheat futures. Japan said it offered to buy 114,000 tonnes of US, Canadian and Australian wheat at its weekly tender.
India's farm ministry cut its wheat production estimate for this year to 69.48 million tonnes, from its May estimate of 71.54 million. The Indian government has already contracted to import 3.5 million tonnes of wheat to offset the shortfall. European wheat futures are on the rise this week amid worries about heat stress on the French wheat crop.
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