US Wheat Review on Thursday: Rallies inline with corn and crude oil

 

 

U.S. wheat bounced Thursday, driven by short-covering in what traders term "oversold" conditions and stabilizing outside and neighboring markets.

 

Chicago Board of Trade March wheat added 8 3/4 cents to US$5.19 1/2 per bushel, toward the middle of a 7-cent trading range. The most actively traded May contract gained 8 cents to US$5.31. Kansas City Board of Trade May wheat bounced 12 1/2 cents to US$5.67. Minneapolis Grain Exchange May wheat added 9 1/2 cents to US$6.12 1/4.

 

Speculative funds bought at 3,000 contracts at the CBOT, according to midday estimates.

 

"First of all, the market's oversold more than anything," said Mario Balletto, a commodities analyst at Citigroup.

 

He said wheat-corn spreading and dryness concerns from China and the southwestern Plains wheat-growing areas of the U.S. added to the support offered by a weaker U.S. dollar and stronger commodities and crude oil.

 

Prices for CBOT May wheat have been in a continuous slide since Feb 9. and are in a six-week old down trend.

 

"We can't go down forever," a CBOT floor broker said, noting he had been expecting wheat contracts to rally after dropping more than 8% since the most recent slide began.

 

Strengthening crude oil and short-covering were the dominant drivers of wheat's rally in the pit, he added.

 

"There was a firmer tonnee today, we were short-term overdone after being pummeled the last few days," another CBOT floor broker said.

 

Pointing to collapsing soybean-soybean meal spreads, he added that wheat seems to have somewhat decoupled from soy's influence. "Corn and wheat held on to each other," he said.

 

Looking forward to Friday's trade he said wheat's ability to extend its rally will depend on the direction of the outside markets in overnight trade."

 

Export sales figures, usually released Thursday, will be delayed until 8:30 a.m. EST Friday.

 

 

Kansas City Board of Trade

 

The weaker U.S. dollar and oversold conditions helped hard red winter wheat futures strengthen Thursday, according to the Kansas City Board of Trade's afternoon commentary citing floor traders.

 

Extended dryness in the HRW-growing areas of the southwestern Plains also presents an element of concern, but it not actively driving the market, traders said.

 

 

Minneapolis Grain Exchange

 

Hard red spring wheat ended mixed with the front month contract at a 13 1/2-cent premium to the May, moderating from a spread that topped 17 cents.

 

Traders of MGE hard spring wheat contracts say tighter than expected stocks in Duluth are keeping the support under the front-month contract as it heads toward delivery.