Soft red winter wheat futures at the Chicago Board of Trade settled mostly higher on Tuesday after a drop in the USDA's weekly condition ratings for US winter wheat prompted short-covering, traders said. However, the market closed well below the day's highs, which were hit shortly after the open. Steep declines in corn and soybeans limited wheat's advances.
CBOT May wheat closed up 2-1/4 cents at $4.77-1/2 per bushel, after reaching a six-week high at $4.89-3/4. July ended up 2-1/2 cents at $4.90-3/4 and December was down 1 cent at $5.09-1/2. Funds bought 3,000 contracts.
Wheat was also weighed by ideas that the market was technically overbought. The new-crop July contract climbed 77 cents from a low of $4.26 on April 2 to Tuesday's intraday high of $5.03.
"In 14 days, that's pretty impressive," ADM Investor Services analyst Steve Freed said. "There was a group of people that felt wheat was approaching an overbought situation." The Kansas City and Minneapolis hard wheat markets closed lower, losing ground to Chicago as firms exited inter-market wheat spreads.
Commodity funds were thought to hold a net short position in CBOT wheat going into Tuesday's session, and a net long in Kansas City and Minneapolis. The weekly crop conditions report was the catalyst for the CBOT rally. The US Department of Agriculture late Monday said 55 percent of the US winter wheat crop was in good to excellent condition, down 9 points from the previous week's rating of 64 percent good/excellent.
The downgrade reflected damage from a widespread freeze earlier this month. Because some the steepest declines were noted in soft red winter (SRW) wheat states including Arkansas, Missouri and Illinois, SRW wheat futures in Chicago led the charge higher. In export news, Japan said it would buy 145,000 tonnes of US, Canadian and Australian wheat at its weekly tender.
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