US Wheat Review on Monday: Ends up on positioning, dryness, dollar

U.S. wheat futures rose Monday on crop concerns, weakness in the U.S. dollar and positioning before a government crop report.

 

Chicago Board of Trade March wheat jumped 8 cents to US$5.65 a bushel. Kansas City Board of Trade March wheat gained 8 1/2 cents to US$5.95, and Minneapolis Grain Exchange March wheat edged up 3 1/2 cents to US$6.58 1/4.

 

Worries about dryness in China and in the U.S. southern Plains continued to lend support to the markets, analysts said. The regions received sprinkles of moisture during the weekend, but more precipitation is needed, they said.

 

"The precipitation wasn't great enough to boost any soil moisture, so that's bringing concerns back into the market of the ongoing dryness situation in the southern Plains," said Terry Reilly, analyst for Citigroup. "Concerns over the China winter wheat crop are still lingering in the market."

 

Commodity funds bought an estimated 3,000 contracts at the CBOT. There was some short-covering ahead of the U.S. Department of Agriculture's February supply/demand report, due out at 8:30 a.m. EST Tuesday, a trader said.

 

The markets trimmed gains ahead of the close. CBOT March wheat hit an open outcry session high of US$5.77. It faces upside resistance at US$6, an analyst said.

 

 

Kansas City Board of Trade

 

A weak dollar helped support KCBT wheat as it makes U.S. grain look more attractive to foreign buyers, analysts said. The U.S. has faced tough competition for export business, and there was market chatter that Iraq had booked non-U.S. wheat in a tender, they said.

 

Light rain fell across the Plains during the weekend, but more will be needed in the next month to ease dryness, private weather firm T-Storm Weather said. There is a chance for more moisture at the end of the week and possibly next week, it said.

 

Traders will look at the National Agricultural Statistics Service's updated crop condition rating for Texas for signs of deterioration. The good-to-excellent rating as of Feb. 1 was 12%. The rating should be "little changed to a little lower" in the updated report, due out Monday, Reilly said.

 

 

Minneapolis Grain Exchange

 

MGE wheat closed firmer in front of the USDA's supply/demand report, which will include updated estimates of U.S. 2008-09 ending stocks and on world production. Traders said they were not expecting major adjustments for the wheat balance sheet.

 

The average of analysts' estimates for U.S. wheat ending

 

stocks is 649 million bushels, down a hair from the USDA's January estimate of 655 million, according to a Dow Jones Newswires survey of 12 analysts. Of the analysts surveyed, five predicted the USDA would leave its estimate unchanged from last month.

 

In other news, weekly U.S. wheat export inspections of 19.048 million bushels were up from the 12.043 bushels inspected the previous week, according to the USDA.