US Wheat Review on Monday: Closes up on demand ideas but trims gains

 

 

Chicago Board of Trade March wheat ended up 9 3/4 cents at US$5.92 1/2 per bushel. Kansas City Board of Trade March wheat closed up 11 1/4 cents at US$6.21 3/4, and Minneapolis Grain Exchange March wheat settled up 4 3/4 cents at US$6.65 1/2.

 

The markets pulled back from session highs following a retreat in CBOT soybeans, analysts said. A rally in soybeans at the opening helped wheat post its session highs, they said. CBOT March wheat reached an open outcry session high of US$6.10, its highest price since Jan. 9, before paring gains.

 

Ideas that the U.S. has become more competitive on global export markets provided support, said Tom Leffler, owner of Leffler Commodities. Production problems in Argentina should limit exports and could send business to the U.S. or Canada, he said.

 

Argentina's agricultural trade office Oncca has rejected a large number of wheat export permits in order to ensure domestic supply, a trader said. The Agriculture Secretariat last week lowered its estimate for wheat production to 8.3 million tonnes from the 9 million tonnes forecast last month due to a lingering drought.

 

Iraq is planning to announce a new tender in February to buy large quantities of wheat, an Iraqi Trade Ministry statement said. The Iraqi Grain Board would purchase enough wheat to cover the country's needs for the first half of 2009 at the tender, it said.

 

Commodity funds bought an estimated 3,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

There are growing concerns about a lack of precipitation in hard red winter wheat areas of the U.S. Plains, analysts said. Little precipitation is expected in dry southern and west-central crop areas during the next 10 days, private weather firm DTN Meteorlogix said in a forecast.

 

"We'll probably see conditions continue to deteriorate in Oklahoma and Texas," said Terry Reilly, analyst for Citigroup. "I think that's starting to support the market, even though a lot of people have been ignoring it."

 

Resistance for KCBT March wheat is at its 100-day moving average of US$6.34, and support is at its 50-day moving average of US$5.85, Leffler said. The contract hit an open outcry session high of US$6.35 before trimming gains.

Minneapolis Grain Exchange

 

MGE wheat finished firmer with the other markets. The session high for March wheat was US$6.80.

 

MGE March wheat closed at a 5 1/2-cent premium to the May contract, compared to a premium of 8 1/4 cents for the nearby contract at the close Friday. Spot basis levels have firmed this month and "moderate cash strength may be helping to push the nearby futures higher," private analytical firm Informa Economics said in a note obtained by Dow Jones Newswires.