January 17, 2008

 

US Wheat Review on Wednesday: Minneapolis Grain Exchange rallies to new high, trades in 60-sent range

 

 

U.S. wheat futures closed mixed Wednesday, as the nearby Minneapolis Grain Exchange contract traded in a historic 60-cent range and set a all-time high for any U.S. wheat future.

 

MGE March wheat hit a new high of US$11.37 3/4 per bushel in late trading, exceeding the previous high of US$11.30, as the contract surged limit up, 30 cents higher. Earlier in the session, MGE and Chicago Board of Trade March wheat tumbled limit down, 30 cents lower, in a brief pullback from strong recent gains.

 

CBOT and Kansas City Board of Trade wheat futures fed off the late rally in MGE wheat, trimming gains and pushing higher in most contracts, analyst said.

 

CBOT March wheat closed 5 1/2 cents lower at US$9.26 1/2. KCBT March wheat rose 3 cents to US$9.59, and MGE March wheat soared 27 cents to US$11.34 3/4.

 

Prices slumped in early activity on profit-taking, spillover pressure and ideas that the markets were due for a setback. Wheat rallied for three days after the U.S. Department of Agriculture of Friday projected total winter wheat acres below trade estimates.

 

CBOT wheat futures led the downside before the late rally as the USDA estimate seedings of soft red winter wheat, traded at the CBOT, were above industry estimates, said Louise Gartner, analyst for Spectrum Commodities. The USDA said seedings of hard red winter wheat, traded at the KCBT, were down from last year, according to the USDA.

 

But CBOT wheat bounced off its lows on short-covering and borrowed strength from the MGE, analysts said.

 

"Minneapolis was the leader," said Brian Hoops, president of Midwest Market Solutions.

 

After the close, Egypt's state-owned General Authority for Supply Commodities said it would tender Thursday to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment Feb. 5-20, on a free-on-board basis. GASC last week canceled a tender for the same amount, for shipment Feb. 1-15, due to unsuitable prices.

 

The results of the tender should help give the markets direction Thursday, a trader said. The appearance of the snap tender may encourage some thoughts that Egypt, known as a savvy wheat buyer on the world market, expects prices to climb higher, he said.

 

Kansas City Board of Trade

 

KCBT wheat futures advanced late in the session on borrowed strength from the MGE rally, traders said. Along with pulling KCBT wheat higher, it also seemed as though the MGE rally helped CBOT corn and soybeans trim losses, Hoops said.

 

The market resisted earlier moves to limit down amid ongoing bullish concerns about the decline in HRW wheat acres, an analyst said.

 

In other news, wheat fields in the Southwest Plains through the Texas Panhandle will continue to be dry the balance of this week, DTN Meteorlogix said. Some cold-weather stress also is possible from a shot of Arctic air moving into the region during Thursday, the private weather firm said.

 

 

Minneapolis Grain Exchange

 

Commercial buying and bull spreading helped MGE March wheat to shake off its limit down move and to push limit up, MGE floor traders said. Commercial interest came in shortly after the contract hit limit down, a trader said.

 

Some MGE floor traders called the 60-cent move the "round tripper," a trader said.

 

"Limit down to limit up, that's not for the faint of heart," Hoops said. "I've got to think we're going to see follow-though buying tomorrow. The trend is higher. "

 

As the market trimmed losses during the session and moved into positive territory, bullish momentum began to build and there wasn't much offered for sale, a MGE trader said. It seemed as though bull spreading may have been a correction to recent bear spreading, he said.

 

There also was local buying and strong inter-market spreading, with traders buying MGE wheat and selling CBOT wheat, a trader said.