US Wheat Review on Tuesday: Bounces on technical buys, short covering

 

 

U.S. wheat futures settled higher Tuesday on technical buying after shaking off early losses.

 

Nearby Chicago Board of Trade March wheat finished up 4 3/4 cents at US$5.15 1/4 a bushel, while CBOT May wheat rose 4 3/4 cents to US$5.26 1/4 per bushel. Kansas City Board of Trade May wheat gained 5 cents to US$5.61 3/4, and Minneapolis Grain Exchange May wheat jumped 3 cents to US$6.05 1/2.

 

CBOT March wheat bounced after hitting an open outcry session low of US$5.06. The US$5 area represents "formidable support, both technically and psychologically," said John Kleist, broker and analyst for Allendale.

 

"There's an assumption of a value area," he said. "Whether that translates to more export business or not remains to be seen."

 

Recent export demand has been seen as disappointing, with Egypt booking 240,000 tonnes of Russian wheat during the weekend and none from the U.S., traders said. Syria on Tuesday secured 200,000 tonnes of Russian wheat in a tender.

 

Lackluster export demand helped weigh on prices in earlier dealings, as the markets spent much of the day session in negative territory, analysts said. CBOT May wheat recovered about a dime after hitting a session low of US$5.16.

 

"We're not competitive enough" on the world export market, Kleist said.

 

 

Kansas City Board of Trade

 

Technical buying and short covering helped boost KCBT wheat after the market drifted lower Tuesday, a trader said. There was a lack of fresh bullish fundamental news, he said.

 

The U.S. is struggling on the export market because there are ample supplies of wheat in the world, said Don Schieber, a wheat producer and vice chairman of the Oklahoma Wheat Commission. The world produced more wheat in 2008-09 than ever before due to favorable weather and expanded plantings.

 

"We've just got a glut on the world market," he said. "Until some of these other countries run out of their wheat, it looks like we're going to be hurting."

 

In other news, wheat in Kansas and Oklahoma is getting an early start to the spring growing season amid lingering concerns about dryness and about the potential for a damaging freeze, producers and agronomists said. Warm weather in the two states, which are major producers of hard red winter wheat, has encouraged plants to emerge from winter dormancy a bit early, they said.

 

 

Minneapolis Grain Exchange

 

Nearby MGE March wheat ended flat at US$6.17 1/2, while May wheat rose slightly. The spread Tuesday narrowed to 12 cents, premium March, compared with 15 cents at the close Monday.

 

Traders are starting to look ahead to the U.S. Department of Agriculture's Agricultural Outlook Forum, at which planting projections are set to be released Friday, an analyst said. Expectations that the government will confirm forecasts for a drop in wheat plantings are probably "already giving us a little bit of support," Kleist said.

 

"It's widely expected they're going to remind us we have less wheat area," he said.