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Wheat Fails to Extend Gains After near 2% Spike

November 1, 2016 at 17:24 by Andrew Moran

Wheat started off the week on a high note by jumping nearly 2%. It was unable to extend those gains on Tuesday as traders have reduced their excitement in the commodities market.

December wheat futures tumbled $0.04, or 0.02%, to $4.12 per bushel at 16:59 GMT on the Chicago Board of Trade (CBoT). This comes one day after wheat spiked 1.7% due to last week’s US regulatory data confirming an immense build in bearish wheat bets, which is something that was unexpected among wheat investors.

Following Friday’s close, the Commodity Futures Trading Commission (CFTC) announced that speculative traders added a net total of 25,081 short wheat futures positions. This is in addition to their extra 18,000 soybean futures positions.

The commodity quickly took advantage of this news on Monday, even with potential crop-friendly rains in long-range weather forecasts in the southern US Plains wheat belt.

It was also reported on Tuesday that the Japanese Ministry of Agriculture is looking to purchase a total of 153,156 tonnes of food quality wheat from Australia, Canada, and the US. The tender is expected to be executed on Friday since Thursday is a holiday in Japan. Rice and wheat are the two most important staples in Japan. The Asian economic powerhouse is the world’s sixth-largest importer of wheat.

Wheat has had a poor 2016. Since starting off the year at more than $6 a bushel, wheat has declined to as low as $3.88. The commodity has gradually recovered since early September, when the US Department of Agriculture (USDA) projected that global consumption of wheat would outpace supply.

Investors are hoping that wheat can hold onto the momentum to finish off the year.

Meanwhile, January soybean futures are down ¼ cent to $10.11-¾ per bushel and December corn futures are down ¼ cent to $3.54-¾ per bushel.

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