Spring wheat futures at the Minneapolis Grain Exchange fell hard on Tuesday as speculators liquidated long positions on ideas that the worst impact of a summer drought in the US spring wheat belt was over, traders said. A lack of buyers added to the weak tone.
MGE September settled 11-3/4 cents lower at $4.86-1/2 per bushel after falling to $4.81, near its 50-day moving average of $4.80-3/4. The contract traded in a wide range, from $4.81 to $5.02-1/2. Deferred months ended down 4 to 11 cents. Funds sold about 2,000 contracts, traders said. Funds have been heavily net long in Minneapolis wheat, leaving the market vulnerable to long liquidation.
"They lightened their load a little bit today," one trader said. Volume was estimated by the exchange at 9,640 contracts, up from 5,985 on Monday.
Weekly crop reports issued late Monday by the US Department of Agriculture left US spring wheat ratings unchanged from the previous week, with 34 percent of the crop in good to excellent condition. The stabilisation followed eight weeks of decline.
"The crop condition report yesterday ... was kind of disappointing. It's one of those factors that took a little air out of the wheat market," said Darrell Jobman, editor in chief of TradingEducation.com.
The USDA's reports also showed that the spring wheat harvest was off to an early start, meaning that the crop was no longer vulnerable to the scorching temperatures that have plagued the region since early June. The spring wheat crop was 33 percent harvested in South Dakota, ahead of the five-year average of 11 percent. In North Dakota, the top US spring wheat state, 5 percent was harvested, about a week ahead of average.
Crop scouts on the Wheat Quality Council's spring wheat tour found mixed results in initial field checks in central and western North Dakota. The tour will issue an overall yield estimate on Thursday afternoon. Scouts on one leg of the tour Tuesday checked four spring wheat fields in central North Dakota and calculated an average yield of 32 bushels per acre, up from last year's tour average for the same area of 29.7 bushels per acre.
Scouts travelling another route farther south and west calculated an average yield of 16 bushels per acre, compared with the previous year's tour average of 32. Crop scouts found that many fields on their tour route had already been harvested. Traders shrugged off export interest from India and Iraq. India's farm minister, Sharad Pawar, told parliament that India will import more wheat if it needs to support buffer stocks.
India has already contracted to import 3.5 million tonnes, with about 760,000 tonnes set to arrive by the end of August. In overnight export news, Japan said it would buy 129,000 tonnes of wheat this week, while South Korea was seeking 21,600 tonnes of wheat. French wheat futures slipped amid forecasts of rain late this week and on profit-taking.
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