US Wheat Review on Wednesday: Bounces slightly amid late buying

 

 

U.S. wheat futures closed slightly higher Wednesday as the markets bounced from sharp losses Tuesday and got late support from suspected buying by index funds.

 

Chicago Board of Trade March wheat closed up 1 1/4 cents at US$5.37 a bushel. Kansas City Board of Trade March wheat edged up 2 1/2 cents to US$5.36 1/2, and Minneapolis Grain Exchange March wheat gained 2 3/4 cents to US$5.43 1/2.

 

Index funds were thought to be buyers of the grains heading into the close as part of a seasonal reallocation process. That process began last Friday but was temporarily interrupted Tuesday because corn fell its daily, exchange-imposed limit, traders said.

 

Wheat and corn closed near session highs, although corn still finished in negative territory. CBOT March wheat hit a session high of US$5.38. The grains are linked because both are used for animal feed and because commodity funds often trade in a basket of products.

 

Corn's weakness weighed on wheat during the day session amid bearishness about a large U.S. crop, traders said. The limit-down drop in corn on Tuesday pulled wheat sharply lower.

 

The index-fund rebalancing is expected to continue Thursday, so market participants will wait to see what happens at the close, a trader said. Activity will likely remain choppy, he said.

 

 

Kansas City Board of Trade

 

KCBT wheat finished firmer as the "market was recovering a little after a big loss," one broker said. KCBT March wheat finished just below its session high of US$5.37, which was set in electronic trading.

 

Hefty world wheat supplies and slow U.S. export demand continue to hang over the wheat markets, traders said. The U.S. Department of Agriculture on Tuesday raised its estimates for U.S. and world wheat ending stocks.

 

Egypt bought Russian and Kazakh wheat in a tender but none from the U.S. Prices in the U.S. are too high to be competitive, traders said.

 

 

Minneapolis Grain Exchange

 

MGE March wheat finished near its session high of US$5.45 1/2.

 

Traders on Thursday will look at weekly U.S. export sales data. Export sales for wheat are expected to be 150,000 to 300,000 tonnes