February 23, 2008

 

US Wheat Review on Friday: Rallies; Minneapolis Grain Exchange wheat ends limit up

 

 

U.S. wheat futures ended sharply higher Friday, with Minneapolis spring wheat futures the leader of the upward assault on prices.

 

May CBOT wheat ended 19 cents higher at US$10.64 1/2, May KCBT wheat settled 28 1/4 cents higher at US$11.15, and May MGE wheat finished 60 cents higher at US$16.18 1/4.

 

"The wheat market remains under the influence of price movements in Minneapolis wheat, with the rallying cry of low stocks continuing to promote a bullish mentality that attracts speculative buyers," said John Kleist, analyst with Kleist Ag Consulting.

 

The market is technically and emotionally charged, and without any near-term fundamental weakness, buyers remain comfortable pushing prices in the absence of any aggressive sellers in the market place, analysts added.

 

The bullish psychology is overshadowing new-crop outlooks of replenished stocks and increased acreage, as traders and analysts remain focused the current tight supply situation in the market, Kleist added.

 

Strong demand for high protein wheat in conjunction with tight stocks continues to serve as the fundamental catalyst for the gains, traders said. "Minneapolis definitely was the leader, influencing Kansas City and subsequently pulling Chicago along for the ride," a CBOT floor analyst said.

 

There was no new fundamental news to key on as a bullish driver, but with speculative buying and a lack of sellers, the path of least resistance is up, he added.

 

Meanwhile, the Minneapolis Grain Exchange's daily trading limit for spring wheat futures will expand to 90 cents per bushel Monday, the exchange said Friday. The daily trading limit for Kansas City Board of Trade hard red winter wheat futures and CBOT soft red winter wheat futures will remain at 60 cents.

 

In CBOT pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 1,000 lots.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures ended sharply higher. The market was buoyed by carryover from the overnight trend, and limit-higher trading in MGE Spring wheat futures, traders said. Disappointing USDA weekly wheat export sales and some numbers coming out of the USDA Outlook conference seen as a little negative, applied early pressure, analysts said.

 

However, once Minneapolis spring wheat rallied to limit highs of 60 cents in the front three months by midsession, prices quickly leaped firmly into positive territory, traders added.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended sharply higher, with old-crop contracts locking limit up 60 cents higher. Calendar spreading was the feature of the day, with the March/May spread moving out to US$3.30 to US$3.50, up from US$2.80 Thursday. Tight supplies and good demand remain the drivers of the market, with a strong cash market adding support, traders added.

 

The May/July spread widened similar to the March/May spread and The July/September spread moved out to US$2.00 Friday, a trader said.