February 23, 2007

 

US Wheat Review on Thursday: Up sharply on fund,technical buys, strong corn market

 

 

U.S. wheat futures finished with strong gains Thursday, with some deferred hard red and spring wheat futures months making new life-of-contract highs as technical and fund buying pushed prices higher, sources said. CBOT May wheat settled above the US$5.00 level for the first time since Dec. 29.

 

CBOT March wheat gained 13 1/2 cents to US$4.89 1/2, KCBT March wheat rose 9 3/4 cents to US$5.11 1/2, and MGE March wheat settled 7 1/4 cents higher to US$5.16 1/2.

 

There was nothing new fundamentally to support the market, said Brian Hoops of Midwest Market Solutions in Yanktonne, S.D. This morning the International Grains Council raised its production estimate for winter wheat but the market disregarded that as technical buying pushed prices higher, he said.

 

The big impact on the market was speculative interest in wheat and the continued rally in corn and soybeans, Hoops said.

 

Corn futures set new life-of-contract highs across the board and reached levels not seen in more than 10 years.

 

Fund buying was active Thursday with speculative fund buying estimated at 7,000 contracts.

 

As long as corn continues to move higher, wheat will rally as it needs to avoid being priced for use as an animal feed ration, a commission house broker said.

 

Price direction on Friday will be determined by what the speculative money wants to do as well the direction of corn and soybeans and the level of weekly exports, the broker added.

 

On daily open auction technical charts, CBOT May remained above its major moving averages.

 

In CBOT trades, Citigroup bought 1,000 May, Man Financial bought 1,000 May, Rosenthal bought 1,000 May and Fimat sold 1,000 May.

 

 

Kansas City Board of Trade

 

Hard red winter futures settled higher as speculative commission house buying pushed prices up for the second session in a row, a KCBT floor trader said.

 

It was a technical and fund-led rally, he added.

 

New life-of-contract highs were set in some deferred contracts.

 

In KCBT trades, Man Financial bought 300 March, 300 May and 500 July. ADM bought 200 March, Man Financial sold 400 March and 500 May.

 

On daily open auction technical charts, May wheat settled at its highest level since Dec. 26 and has rallied 24 cents from last Thursday's settlement price.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures settled with good-sized gains, benefiting from spillover on the rally across the commodity spectrum, MGE floor sources said.

 

Technical and fund related buying provided additional support, they added.

 

On daily open auction charts, May spring wheat settled at its highest level since late December.

 

Friday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report at 8:30 a.m. EST (1330 GMT). Analysts expect wheat sales between 300,000-700,000 metric tonnes for the week ended Feb. 15. Sales for the week ended Feb. 8 totaled 361,400 metric tonnes.