Hard red winter wheat futures at the Kansas City Board of Trade closed higher on Monday on a bounce from last week's broad-based commodities sell-off, traders said. Traders said the rally was technical in nature. Prices came off their highs toward the close on light commission house selling, traders said.
"We're trying to figure out what fair value is," one KCBT trader said of the volatile market. "There is bargain hunting. And no one wants to be short ahead of next week's report," the trader said, referring to the US Department of Agriculture's March 31 planting intentions and quarterly grain stocks reports.
KCBT May wheat closed up 36-1/2 cents, or 3.5 percent, at $10.68-1/2 per bushel, but came off the day's high of $11.07-1/2. Back months ended up 25 to 60 cents, with new-crop July up 51 cents at $10.68. The market had background support from concerns about dry conditions in parts of the southern US Plains wheat belt.
The dry areas were expected to expand this week in western Texas, south-western Kansas and the Oklahoma Panhandle, with little or no moisture in the forecast.
But eastern areas are in good shape, benefiting from more moisture over the winter. Turkey's Grain Board was slated to tender to import 250,000 tonnes of milling wheat on March 26, with the grain expected to come from the United States.
Also bullish was strength seen in Russian domestic wheat prices, coming amid the government's imposition of a 40 percent tariff on exports. But there was bearish news that India has no immediate plans to import wheat as it hopes to harvest a good crop later this month.
The market shrugged off pressure from an increase in KCBT's margins to trade wheat. The exchange raised the initial speculative margin on HRW wheat futures to $5,625 per contract from $3,750 after Thursday's close.