US Wheat Review on Wednesday: Rises in technical recovery from losses

 

 

Technical buying shoved U.S. wheat futures higher Wednesday in a rebound that was underpinned by a sale to Egypt.

 

Chicago Board of Trade March wheat closed up 21 3/4 cents, at US$5.71 3/4 per bushel. Kansas City Board of Trade March wheat jumped 20 3/4 cents to US$6.00 1/2, while Minneapolis Grain Exchange March wheat climbed 17 3/4 cents to US$6.47 1/4.

 

Wheat was due for a recovery as a sell-off Tuesday was overdone, traders said. CBOT March wheat fell 28 1/4 cents Tuesday on spillover pressure from weak CBOT soybeans and from strength in the U.S. dollar.

 

Wheat felt some support from other markets Wednesday, as soybeans and corn ended higher, a trader said. The dollar was a bit weaker, which is seen as supportive because it gives foreign countries more buying power to import U.S. grain.

 

It seemed as though the path of least resistance for wheat was up, said Jason Britt, president of Central State Commodities.

 

"There's a little better tonnee across commodities as a whole," he said. "We were having a down day in the commodity world [Tuesday], and wheat really took the brunt of that."

 

CBOT March wheat will run into "fairly good resistance" around US$6, Britt said. There is buying interest from end users around US$5.50, and the market should continue to reject that price level as long as corn and soybeans remain near current prices, he said.

 

A sale of 60,000 tonnes of U.S. soft red winter wheat to Egypt helped support Wednesday's rally, a CBOT floor analyst said. Egypt also bought Russian and French wheat in a tender.

 

Still, the U.S. faces tough competition from other exporters, such as the Black Sea, a trader with export ties said. Egypt bought the chunk of U.S. wheat because it was aggressively discounted, he said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures rose in a technical recovery from Tuesday's slide, a trader said. The market was "oversold" and due for a bounce, he said.

 

Weekly U.S. wheat export inspections of 6.916 million bushels were weak, traders said. Analysts had expected inspections of 11 million to 17 million.

 

In other news, Argentina cut its wheat production estimate to 8.3 million tonnes from a previous estimate of 9 million due to drought. The reduction was seen as friendly because it indicates Argentina will have less wheat to export, traders said. However, Canada will most likely benefit from demand that shifts north from Argentina, the trader with export ties said.

 

 

Minneapolis Grain Exchange

 

MGE wheat followed CBOT and KCBT wheat higher. The MGE closed lower Tuesday in sympathy with the other markets, traders said. Strength in soybean added to the positive tonnee, a trader said.

 

Aggressive spring wheat exports from Canada remain a bearish fundamental factor for the market, a trader said. Country selling continues to be light, he said.