US Wheat Review on Monday: Rises on positioning, spillover support

 

 

U.S. wheat futures advanced Monday as the markets recovered from recent losses amid general strength in commodities.

 

Chicago Board of Trade March wheat ended up 10 3/4 cents, or 2.3%, at US$4.84 a bushel. Kansas City Board of Trade March wheat rose 11 cents, or 2.3%, to US$4.95 1/2. Minneapolis Grain Exchange March wheat jumped 9 1/4 cents, or 1.8%, to US$5.11 3/4.

 

There appeared to be some short-covering and profit-taking by holders of short positions following recent selloffs, analysts said. CBOT wheat is vulnerable to short-covering rallies because speculative funds hold a large net short position.

 

Wheat finished higher amid gains in neighboring CBOT corn and soy and in outside markets like crude oil and gold. Commodity funds bought an estimated 4,000 wheat contracts at CBOT.

 

The bounce will likely be "fairly short-lived" because fundamental supply and demand factors are unsupportive for wheat, said Brian Hoops, president of Midwest Market Solutions. U.S. and world wheat supplies are ample, and the U.S. continues to face stiff competition for export business.

 

CBOT March wheat closed above its 10-day moving average around US$4.80 1/4. The contract hit a session high of US$4.89 and faces upside resistance at US$4.90 to US$5, an analyst said.

 

 

Kansas City Board of Trade

 

KCBT March wheat finished near its session high of US$4.98.

 

Traders were anticipating the release of the U.S. Department of Agriculture's February supply and demand report at 8:30 a.m. EST Tuesday. It will include fresh estimates for U.S. wheat, corn and soy carryout.

 

"For the wheat, anyway, it's going to be a big ending stocks number, even if it is down from last month," Hoops said.

 

The average of analysts' estimates for 2009-10 carryout is 973 million bushels, down slightly from USDA's January estimate of 976 million, according to a Dow Jones Newswires survey of 16 analysts. The range of estimates was 876 million to 1.001 billion bushels.

 

 

Minneapolis Grain Exchange

 

MGE March wheat closed near its session high of US$5.14.

 

The markets will take their early direction Tuesday from the USDA report, traders said. They said they were waiting to see the data regarding wheat but not expecting significant changes from last month.