US Wheat Review on Tuesday: Hits 4-week highs on dollar, technical buys

 

 

U.S. wheat futures climbed to four-week highs Tuesday on supportive outside markets, technical buying and short-covering, but fundamental factors remain unfriendly to bulls.

 

Chicago Board of Trade March wheat soared 18 1/2 cents, or 3.8%, to US$5.05 per bushel. Kansas City Board of Trade March wheat jumped 18 cents, or 3.6%, to US$5.12 1/2. Minneapolis Grain Exchange March wheat climbed 16 cents, or 3.2%, to US$5.20 1/2.

 

Grains rose amid widespread strength in commodities and gains in equities. Commodity funds bought an estimated 5,000 wheat contracts at CBOT. CBOT March wheat hit a session high of US$5.09, its highest price since Jan. 19.

 

Weakness in the U.S. dollar underpinned the markets as it makes dollar-denominated commodities more attractive to foreign buyers and increases investors' appetite for risk, analysts said. The dollar dropped as worries about the global economy eased after weighing on markets last week, they said.

 

"I think people are just feeling a little more confident coming into these commodities and willing to take on a little more risk," said Shawn McCambridge, grain analyst at Prudential Bache.

 

Non-commercial speculative funds held a record large net short position of 74,767 contracts in CBOT wheat futures and options in the Commodity Futures Trading Commission's latest supplemental report, issued Friday for the week ended Feb. 9. That makes the market vulnerable to bursts of short-covering.

 

 

Kansas City Board of Trade

 

KCBT March wheat hit a session high of US$5.16 3/4, its highest price since Jan. 19.

 

The falling dollar, rallying equities and general commodity buying helped prop up KCBT wheat, traders said. Wheat finished stronger with corn, soy, crude oil and gold.

 

Weather doesn't look worrisome for the U.S. winter wheat crop, traders said. The Plains have received good moisture and should have a "pretty normal" amount of damage from cold weather, an analyst said.

 

 

Minneapolis Grain Exchange

 

MGE March wheat reached a session high of US$5.25 1/4, its highest price since Jan. 15.

 

Supply and demand factors didn't contribute to the rally, traders said. The world has comfortable supply levels of wheat, and there continues to be competition for export business.