January 29, 2008

 

US Wheat Review on Monday: Limit gains as market bids for US acres

 

 

Chicago, Kansas City and Minneapolis wheat futures closed locked up the 30-cent trading limit across the board Monday, as wheat markets are in a bidding war for planted acres in the U.S. this year, said a market analyst.

 

Chicago Board of Trade March wheat futures closed up 30 cents at US$9.63 a bushel. Kansas City Board of Trade March wheat futures closed up 30 cents at US$10.00. Minneapolis Grain Exchange September wheat closed up 30 cents at US$12.97 a bushel.

 

Minneapolis hard red spring wheat futures led the surge and opened locked limit up, and Chicago and Kansas City futures followed later in the trading session. Minneapolis wheat futures did surge to fresh contract and all-time highs Monday, following an open and close locked-limit-up trading affair in that market Friday.

 

Especially in the Minneapolis hard red spring market, wheat futures prices are rallying very strongly due to concerns about limited supplies and more acres needing to be planted in the U.S. to meet strong worldwide demand, said the analyst.

 

Also Monday, stronger "outside" commodity markets - namely gold and crude oil futures - and a weaker U.S. dollar added to speculative and commodity fund buying interest in wheat futures markets, said the analyst. Gold futures hit another all-time Monday. The U.S. dollar suffered as most expect the Federal Reserve to lower U.S. interest rates Wednesday. That could keep the greenback under pressure for the near term, which would be a continued underlying bullish factor for wheat futures.

 

Weekly USDA wheat export inspections figures, released Monday morning, were also bullish for the wheat markets. In the latest reporting week, there were 24.371 million bushels of wheat registered for export. That compares to 18.836 million bushels reported last week.

 

 

Chicago Board of Trade

 

Technically, March soft red futures have made a solid rebound from last week's low, said a market technician. Bulls have fresh upside technical momentum and are looking for more on the upside in the near term, he said. The next upside price objective for the bulls is to push prices above technical resistance at the contract high of US$10.09 1/2, basis March futures. Chart resistance below that level is located at the September high of US$9.66 1/2 and then at last week's high of US$9.86 in the March. Technical support is seen at US$9.50 and then at US$9.40.

 

 

Kansas City Board of Trade

 

March futures prices are back in double-digit territory with the US$10.00 mark hit on Monday. The next upside technical price objective for the hard red winter bulls is pushing prices above resistance at the contract high of US$10.33, basis March futures, said the market technician. Below that level there is technical resistance located at the December high of US$10.19 a bushel. Technical support for March hard red is located at US$9.85 and then at Monday's low of US$9.76.

 

 

Minneapolis Grain Exchange

 

Friday's and Monday's single "dot" on the daily bar chart for March futures shows just how bullish is the hard red spring futures market, said the market technician. "When you see a dot, dot up on the charts when prices are already in record-high territory, it's certainly a runaway bull market move," he said. With prices already into uncharted territory, much higher price levels are still possible, he said, adding that would-be top-pickers should beware.