Wheat Rebounds From 3-Month Low as Slump May Spur Demand
Category: Grains
(Bloomberg) – Wheat rebounded from the lowest level in more than three months amid speculation the longest slump in 15 years may spur demand and as recent rainfall failed to improve the crop’s condition in the U.S.
Wheat’s relative strength index, a gauge of price momentum, fell to 22.1 yesterday, the lowest since Jan. 10. The index rose to 26 today, with values below 30 considered by some traders to indicate an asset is oversold.
“There would be opportunistic buyers at this level,” Vyanne Lai, an agribusiness economist at National Australia Bank Ltd., said by phone from Melbourne. “Planting progress and weather conditions in the U.S. are relatively positive. Planting is on track and so it assuages fears of tightness in supply.”
Wheat for July delivery rose 0.6 percent to $6.1625 a bushel on the Chicago Board of Trade by 5:09 a.m. local time after earlier slipping to $6.1075, the lowest level for a most active-contract since Feb. 28. Prices fell for a 10th session yesterday, the longest such slump since Sept. 1, 1998.
The price drop for wheat “has made the market look oversold based on RSI,” Paris-based farm adviser Agritel wrote in a market comment. “In this context a technical rebound could happen at any moment.”
Futures trading volume in Chicago was about 36 percent below the 100-day average for the time of day, according to data compiled by Bloomberg. Milling wheat for November delivery traded on Euronext in Paris rose 0.7 percent to 191 euros ($260) a metric ton.
Winter Wheat
About 30 percent of U.S. winter wheat was in good or excellent condition as of June 1, unchanged from a week earlier, the U.S. Department of Agriculture said June 2. Parts of Texas, Oklahoma, and Kansas received above-normal rain in the two weeks through June 3, data from World Ag Weather show.
Planting of U.S. spring wheat was 88 percent complete from 74 percent in the previous week, the USDA reported. Showers later this week in central and northern areas of the Plains wheat belt will replenish moisture, MDA Information Systems LLC wrote in a report yesterday.
Corn for July delivery added 0.3 percent to $4.5975 a bushel after dropping to $4.56 yesterday, the lowest price for a most-active contract since Feb. 28. Soybeans increased 0.7 percent to $14.9125 a bushel.
