US Wheat Review on Wednesday: Jumps on technical buying, dryness worries

 

 

Technical buying and concerns about a lack of moisture in U.S. hard red winter wheat areas pulled U.S. wheat futures higher Wednesday, traders and analysts said.

 

Chicago Board of Trade March wheat rose 9 1/2 cents to US$5.24 3/4 per bushel, while CBOT May wheat closed up 9 1/2 cents at US$5.35 3/4. Kansas City Board of Trade May wheat ended up 12 1/4 cents at US$5.74, and Minneapolis Grain Exchange May wheat settled up 7 1/4 cents at US$6.12 3/4.

 

The gains were a turnaround from early weakness, as nearby CBOT March wheat rejected the low end of its range, said Jason Britt, president of Central State Commodities. The contract hit an open outcry session low of US$5.10 1/2 before bouncing.

 

The rebound was a "pretty impressive showing in the face of" the early losses and a stronger U.S. dollar, Britt says. A firm dollar is usually seen as bearish because it makes U.S. grains less attractive to foreign buyers.

 

The path of least resistance heading forward appears to be higher, Britt said. The markets seem to be "in a value area," he said.

 

On the upside, CBOT March wheat will likely encounter willing sellers in the area of US$5.60 to US$5.80, Britt said. The lower end of its range is below US$5.20, he said.

 

 

Kansas City Board of Trade

 

Ongoing concerns about dryness in HRW wheat areas of the U.S. Plains may have sparked some short covering, an analyst said. Traders are a bit leery of trading the dryness because good rains could improve the situation "within a few days," although "it is dry" now, Britt said.

 

"There's getting to be a little bit more talk on this dryness," he said. "It is a concern as the wheat is coming out of dormancy. We're at least at a level that we're afraid to push" the market too hard to the downside.

 

Significant precipitation remains unlikely across the HRW wheat belt, though a transition toward wetness typically occurs in March, T-Storm Weather said in an update to a daily forecast. A wetter pattern "will need to occur to prevent a notable dryness issue," the private weather firm said. Temperatures will cool across the Plains from Thursday through the weekend, but unseasonable warmth quickly returns next week, it said.

 

 

Minneapolis Grain Exchange

 

Nearby MGE March wheat closed up 11 3/4 cents at US$6.29 1/4. The March/May spread widened to 16 1/2 cents from 12 cents at the close Tuesday.

 

Traders are waiting for the U.S. Department of Agriculture to issue weekly export sales data at 8:30 a.m. EST Thursday. Analysts expect U.S. wheat export sales to be 250,000 to 440,000 tonnes.