Mon 19 Aug 2013 07:22:26 CT
Wheat futures followed corn higher overnight and December Chicago wheat is up 6 at 6:40 am act. Disappointing weekend rainfall helped to spark the rally. US equity indices are trading both sides of the unchanged and the US Dollar is edging lower.
The Commitments of Traders Futures and Options report as of August 13th for Kansas City wheat showed Non-Commercial traders were net long 8,242 contracts, up 6,728 contracts for the week. The Commercial traders were net short 3,623 contracts, up 6,425 contracts and this represents a change from a net long to net short position. Non-Commercial and Non-reportable combined traders held a net long position of 3,622 contracts and have switched from a net short to a net long position. Trend following funds (Non-Commercial net of Index Funds) held a net short position of 3,870 contracts, down 6,612 for the week. The KC Sept/Dec spread continues to push up closer to par and was last quoted at a 4 cent carry. The strength in the front month calendar spread, bullish trend in the KC/Chicago inter-commodity spread, strong basis, and steady export demand from Brazil favors the bulls short term.
A warmer and drier forecast for the US Midwest over the next week helped to spark a rally in corn overnight and wheat is following. Corn vs. wheat spreads continue to edge lower. Northern Hemisphere harvests are beginning to wrap up with the French harvest over 90% complete compared to 91% last year. Wheat growing regions have seen warmer temperatures over the last week which has helped to move harvest along at a brisk pace. Quality has improved and production is large. This pressured French markets last week but futures are edging higher this morning, mostly in line with the Chicago market. Europe was dry over the weekend but light showers were seen in areas of Russia and the FSU. The Russian harvest is moving forward with 34.7 million tonnes harvested as of August 15th compared to 27.9 million last year. The average yield is estimated at 3.01 tonnes per hectare as compared to 2.18 last year. Eastern regions of Australia saw less than an inch over the weekend but the northern areas remain somewhat dry. Most of the growing region will trend drier than normal this week with the exception of the southeast.
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