Wheat rebounded amid speculation that yesterday’s slide to a four-year low may prompt some investors to close bets on a price drop and as rain forecast for parts of Europe raises concerns about crop quality.
Wheat futures in Chicago (CBOT:ZWN14) entered a bear market in June, and the most-active contract has dropped 28 percent from a peak of $7.44 a bushel on May 6. The 14-day relative strength index for wheat, a gauge of price momentum, was at 33.6, near the level of 30 below which some analysts consider indicates a security to be oversold.
“The Chicago market remains sharply oversold, from a technical perspective, a factor that could lead to a round of non-commercial short-covering,” Darin Newsom, a senior analyst at DTN, wrote in a comment today, referring to closing of wagers on a price decline.
Wheat for September delivery rose 0.8 percent to $5.3425 a bushel on the Chicago Board of Trade at 7:34 a.m. local time, after futures slumped to $5.2375 yesterday, the lowest since July 2010. Milling wheat for November delivery rose 0.7 percent to 177.50 euros ($239.11) a metric ton on Euronext in Paris.
“Grain futures are higher on bargain hunting in technically oversold markets,” Paul Georgy, the president of Allendale Inc., wrote in a market comment today.
Wet weather means wheat harvests in Europe will continue to be delayed in the next 10 days, causing quality declines as well as potential losses, Commodity Weather Group wrote in an e- mailed report today.
Rain is forecast in Germany, parts of France and central Europe this week and the next, with most of Italy, parts of Poland and western Romania forecast to get more than twice usual rainfall through Aug. 6, World Ag Weather data show.
“Rains are spreading across the continent this week and will be followed by another rain event early next week, keeping wetness a threat to crop quality and resulting in more feed wheat,” CWG said.
Corn for December delivery (CBOT:ZCN14) added 0.3 percent to $3.7325 a bushel in Chicago after dropping to $3.705 yesterday, the lowest for a most-active contract since July 2010. Soybeans for November (CBOT:ZSN14) rose 0.3 percent to $10.75 a bushel, reversing an earlier drop. Futures fell to $10.65 on July 11, the lowest level since October 2010.