January 24, 2007

 

US Wheat Review on Tuesday: Settles up on technicals, firm corn, soy

 

 

U.S. wheat futures ended near session highs Tuesday, scoring double-digit gains in light activity on technical buying and spillover support from firm corn and soybean futures in anticipation of Tuesday's State of the Union address by the President, sources said.

 

CBOT March wheat rallied 15 1/4 cents to US$4.80 1/4, KCBT March wheat gained 13 3/4 cents to US$5.00 3/4, and MGE March wheat rose 9 3/4 cents to US$5.05 3/4.

 

There wasn't much interest in selling wheat ahead of the speech, a floor analyst said.

 

President George W. Bush is expected to call for the U.S. to reduce its usage of gasoline by 20% in the next 10 years by boosting the supply of renewable and alternative fuels and increasing fuel efficiency standards for cars, a senior White House official said Tuesday.

 

The President will also call for an increase in the size and scope of the current renewable fuel standard to 35 billion gallons by 2017, nearly five times larger than the level targeted for 2012, the official added.

 

Technical buying boosted prices as "there was not much of an offer (selling) Tuesday," a floor trader said.

 

On daily technical charts, March wheat settled above its 20-day moving average for the first time since late December but remained within its recent trading range.

 

Light fund buying also contributed to the gains, the analyst added.

 

Fund buying was estimated at 2,000 contracts.

 

Wheat corrected after several days of weakness with the gains magnified by the thin trade, said John Kleist, senior analyst with Top Third Ag Marketing.

 

The recent price break might have helped wheat price itself back into export markets, but that remains to be seen, he added.

 

Wheat has been in a consistent downtrend over the past several months, the fundamentals have not changed, but with the prospects for potential gains in corn and soybeans after the speech Tuesday night, wheat could trade higher as well, Kleist said.

 

In the eastern U.S. Midwest soft red wheat growing region, there is a chance for snow or light flurries Wednesday with mainly dry weather Thursday and Friday, said DTN Meteorologix Weather.

 

In CBOT trades, ABN Amro bought 800 December and Fimat sold 500 March.

 

 

Kansas City Board of Trade

 

Fresh buying late in the session helped hard red wheat futures extend earlier gains, pushing the market to new highs on the day, sources said. Additional strength from spillover from CBOT corn and soybean futures was also a factor behind the rally, they added.

 

Spread trading was a feature with 600 March-May traded. Fimat bought 400 July, Man bought 400 March and Prudential bought 300 December.

 

On daily technical charts, KCBT March remained within its recent trading range, above its 10-day moving average but below its 200-day moving average of US$5.03.

 

Warmer weather is expected over the next 5-to-7 days in the U.S. hard red wheat winter wheat belt, which will help melt the snow cover, DTN Meteorologix Weather said.

 

 

Minneapolis Grain Exchange

 

Spillover buying from stronger prices in Chicago helped boost spring wheat futures, an MGE floor broker said.

 

Light commercial related interest in December was noted and both September and December made new contract highs in light trade, the broker added.