February 14, 2007

 

US Wheat Review on Tuesday: Higher on spillover, light speculative buying

 

 

U.S. wheat futures finished higher Tuesday, supported by spillover support from stronger corn and soybean futures, higher outside markets and light speculative fund buying in quiet trading, floor sources said.

 

CBOT March wheat settled 3 1/4 cents higher at US$4.59, KCBT March wheat gained 5 3/4 cents to US$4.87 1/2, and MGE March wheat ended up 5 1/2 cents at US$4.97 1/2.

 

Spillover from stronger corn and soybean futures provided support, a CBOT floor broker said. Soybean futures ended moderately higher and near new life-of-contract highs set last week and nearby corn futures traded to their highest levels since mid-to-late January.

 

Higher outside markets in metals and energy as well as a weaker dollar were supportive to futures, floor sources added.

 

"Wheat is showing some indications of trying to make a bottom, because of repeated attempts and failures to take out the January lows," said John Kleist, senior analyst at Top Third Ag Marketing in Chicago.

 

An announcement from India that it banned exports was also "psychologically supportive" to the market, though the move is probably a "wash" right now, Kleist said.

 

If India's not exporting wheat to keep domestic supplies ample it probably means the country won't be importing much wheat, he added.

 

India banned exports of wheat to control local prices and augment supplies, a senior government official said Tuesday.

 

Position squaring after Monday's weakness and ahead of the USDA's baseline projections due out Wednesday near midday was also supportive, a floor trader said.

 

Wheat could see additional position squaring ahead of the USDA report Wednesday, the trader added.

 

On daily open auction charts, March traded an inside day, between the high and low established in Monday's trading session.

 

In CBOT trades, ADM sold 800 July and Goldenberg-Hehmeyer sold 600 March as part of a wheat-corn spread.

 

Overall commodity fund buying was estimated at 1,500 contracts.

 

 

Kansas City Board of Trade

 

Hard red wheat futures settled higher, with spillover from stronger corn futures and light speculative buying supporting prices, a KCBT floor source said. Flat price activity was thin with spreading the main feature of the session, they added.

 

In spread activity, ADM bought 1,300 March-May, Man Financial bought 800 May-March and JP Morgan bought 400 May-March.

 

On daily open auction technical charts, KCBT March settled above its 10-day and 20-day moving averages.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures finished higher as corn took off and spring wheat followed," an MGE floor broker said. Light commercial buying of the nearby month, cash market strength and bull market spreading also supplied support, the broker added.

 

In spread trading, Country Hedging bought 400 March-May.

 

On daily open auction charts, March spring wheat settled above its 10-day, 20-day, 40-day and 200 day moving averages.

 

On Wednesday, the U.S. Department of Agriculture is scheduled to release its 10-year baseline projections at noon EST.