January 25, 2008

 

US Wheat Review on Thursday: Rebound, demand pushes Minneapolis Grain Exchange March to limit up

 

 

U.S. wheat futures ended mostly higher Thursday, with the nearby Minneapolis Grain Exchange contract closing limit up on solid demand and in a rebound from recent losses.

 

Chicago Board of Trade March wheat finished 4 cents higher at US$9.09 per bushel. Kansas City Board of Trade March wheat settled 1/4 cent higher at US$9.55, and MGE March wheat closed limit up, 30 cents higher, at US$12.37.

 

CBOT wheat futures jumped in a turnaround from steep losses Tuesday and Wednesday. Strength at the MGE also helped lead the CBOT higher, an analyst said.

 

However, trading was very choppy during the session, with traders still nervous about the potential for a recession, a CBOT floor broker said. The U.S. stock market rose Thursday, but lingering fears about the potential for recession made traders jittery, he said.

 

New-crop CBOT July wheat closed lower as the contract corrected after closing higher in pit trading Tuesday but lower in electronic trading, a CBOT floor trader said. The contract was only able to partially correct Wednesday because of limit down moves, he said.

 

The U.S. Department of Agriculture on Friday will release its weekly export sales report, one day later than usual due to the Martin Luther King Jr. holiday this week. Analysts expect weekly wheat export sales to total 300,000 to 600,000 tonnes.

 

In other news, Argentina is poised to reopen its wheat export registry this week or next for a limited amount of grain, the president of the Argentine wheat growers association said. The government is expected to clear about 1.5 million more tonnes of wheat for export, he said.

 

However, an Agriculture Secretariat spokesman said there was no official confirmation that the export registry would be opened soon. New Argentine export commitments have been blocked since early December.

 

 

Kansas City Board of Trade

 

KCBT wheat futures were on the defensive for much of the day session amid an absence of buyers, a KCBT floor trader said. Buyers were hesitant to step out after recent pullbacks, with some wondering whether the market was just seeing a temporary easing of fears about a recession, an analyst said.

 

Volume was light, and trading was "real airy and choppy," the trader said. There was not much fresh news for the market, he said. Weakness at the KCBT weighed on CBOT wheat during the day session, traders said.

 

 

Minneapolis Grain Exchange

 

MGE March wheat surged 30 cents higher in early activity and hovered at or near the limit up level throughout the session. MGE stayed firm despite a pullback at the KCBT and choppy activity at the CBOT.

 

There is strong demand for spring wheat, traded at the MGE, and concerns about tight supplies, analysts said. Spring wheat is battling corn and soybean for acres in the U.S. northern Plains.

 

"Minneapolis hard red spring wheat... is so tight," said Jim Bower, owner of Bower Trading.

 

In other news, the MGE said it set new records for daily electronic volume and for options volume in January. The growth in volume has been accompanied by strong price rallies and boosted by the exchange's migration to the CME Globex electronic trading platform, MGE officials said.