February 22, 2007

 

US Wheat Review on Wednesday: Good gains set on corn rally, fund buying

 

 

U.S. wheat futures settled higher Wednesday as spillover buying from stronger corn and soybean futures led wheat higher, with additional gains from fund and technical buying, sources said.

 

CBOT March wheat ended 11 1/2 cents higher at US$4.76, KCBT March wheat rose 8 3/4 cents to US$5.01 3/4, and MGE March wheat settled 7 cents higher at US$5.09 1/4.

 

Corn futures traded at over 10-year highs and soybean futures set new life-of-contract highs in some months.

 

In general it was a commodity-wide rally led by the funds, said Jason Britt, an analyst with Central States Commodities in Kansas City. In addition, once CBOT May wheat rallied past US$4.82, technical buying extended the gains, he added.

 

Wheat rallied on the strength from the rest of the floor as well as speculative buying, a floor analyst said. There was little in the way of fresh inputs but not much wheat for sale for much of the day, adding to the upside, he added.

 

Overall commodity fund buying was estimated 4,000 contracts at the CBOT.

 

Wheat is in a mad scramble to make sure too much doesn't enter into animal feed rations so the price has to go up, said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

If the price stays too low relative to corn, then wheat will be fed to animals and the result will be tighter wheat stocks, he said.

 

With wheat reversing higher from Tuesday's weakness, the market could see additional gains Thursday, a floor source said.

 

On daily open auction technical charts, CBOT May settled at its higher level in almost one month and settled above its 40-day and 50-day moving averages for the first time since late December.

 

In CBOT trades, Tenco bought 600 July, Citigroup bought 600 May and Fortis bought 300 May. Citigroup sold 400 May and Man Financial sold 200 May.

 

 

Kansas City Board of Trade

 

Hard red winter wheat futures finished higher, underpinned by speculative commission house and fund buying, KCBT floor sources said.

 

Fund buying was estimated at 1,500-2,000 contracts.

 

Wheat was led higher by the gains in corn and soybeans, a floor source added.

 

In KCBT trades, ADM bought 300 March, Harvest States bought 300 March and Prudential bought 300 March. Man Financial sold 900 March and 300 May.

 

On daily open auction technical charts, May wheat settled at its highest level since Jan. 12.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures ended higher, primarily following the gains set in CBOT corn and soybean futures as well as the outside markets, floor sources said.

 

Technical buying added to the gains with May spring wheat ending at its highest level since Dec. 29.

 

Good country movement of spring wheat was noted early in the session, an MGE floor broker said.

 

Minneapolis cash wheat receipts totaled 94 cars, compared to 132 cars last year on this date.