January 31, 2007

 

US Wheat Review on Tuesday: Ends near highs on firm corn, strong crude

 

 

U.S. wheat futures settled with modest gains in choppy trade Tuesday, recovering from early technical weakness as firm corn futures and spillover from sharp gains in crude oil supplied support to prices, sources said.

 

CBOT March wheat gained 3 cents to US$4.59 1/2, KCBT March wheat rose 3 1/2 cents to US$4.81 3/4, and MGE March wheat settled 2 1/4 cents higher to US$4.89 1/2.

 

Wheat was weaker at the start, but was unable to move below technical support, said Jason Britt, an analyst at Central States Commodities in Kansas City, Mo. Sellers were not interested in pushing the market further with crude oil rallying and that brought in some position squaring, he said.

 

March crude oil was trading over US$2.50 higher when the grain futures closed.

 

In addition, it's the end of the month and that brought in additional interest from people squaring up positions, he added.

 

March wheat held support on daily technical charts and started to firm after March corn couldn't trade under Monday's low, a CBOT floor analyst said.

 

Wheat continues to remain a follower of corn with the strength in soybeans and soyoil also helping underpin the market, the analyst added.

 

The U.S. Department of Agriculture reported sales of 100,000 metric tonnes of hard red winter wheat to Iraq for delivery in the 2006-07 marketing year. The news had little impact, CBOT floor traders said.

 

Wheat was oversold and due for a correction and depending upon what corn does Wednesday, it could see some additional gains, a floor broker said.

 

On daily open auction charts, March wheat settled above its 200-day moving average, but under its other major moving averages. The 14-day relative strength index in March is 42.44.

 

In CBOT trades, Prudential bought 300 December, JP Morgan sold 400 March and Man Financial sold 200 March.

 

In options trading, Tenco bought 1,000 March US$4.50 puts and sold 250 March US$4.80 puts.

 

Commodity fund buying was estimated at 2,000 contracts.

 

 

Kansas City Board of Trade

 

Hard red wheat futures settled with light gains in a low volume trade, bouncing off early losses on higher grain futures and crude oil prices, a KCBT floor trader said.

 

Wheat export news from the USDA on that sale of hard red winter to Iraq was not a "big deal" the trader said but was also supportive, he said.

 

On daily open auction technical charts, KCBT March filled on the downside an upside gap created earlier in between the high on Jan. 10 and the low established on Jan. 11.

 

In mid-day KCBT trades, Man Financial bought and sold 200 March wheat, Fimat bought 200 March and UBS sold 100 July

 

 

Minneapolis Grain Exchange

 

Spring wheat futures ended modestly higher, benefiting from spillover support from stronger CBOT grain futures, a floor broker said. There was not much selling interest but trading activity remained light, he added. There was some interest in rolling out of March into May and cash selling in the country is quiet but overall the market remains range-bound, the broker said.

 

On technical charts, MGE March wheat filled to the downside an upside price gap created between Jan. 10 and Jan. 11, and settled under its major moving averages.