Short-covering continued in the wheat market as funds liquidated more of the record short position. Wheat was also supported by the soybean rally and outside markets. Funds have reduced the net short by 21k contracts over the last two sessions, taking the net position back below 100k contracts. Extended weather forecasts look better every day for the 6-14 day period, with cooler temperatures and precipitation chances holding on. Fundamentals do not support the recent rally, so the market could be setting up for a reversal after the fund short-covering ends, with favorable weather conditions for the U.S. and Russian crops and global stocks remain abundant and values are moving lower. Domestic cash values are steady to slightly better, as buyers are showing interest in specific spreaders and quality stocks. Look for short-covering support to continue at a slower rate, with corn and soybeans trading mixed following yesterday’s rally.
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