US Wheat Review on Friday: Bounces on short-covering, spillover buys

 

 

U.S. wheat futures rallied Friday on suspected short-covering, month-end positioning and spillover support from neighboring markets, but the gains are expected to be short-lived.

 

Chicago Board of Trade May wheat ended up 15 1/2 cents, or 3.1%, at US$5.19 1/4 a bushel. That was up 15 1/4 cents on the week.

 

Kansas City Board of Trade May wheat closed up 13 1/2 cents, or 2.6%, at US$5.21. Minneapolis Grain Exchange May wheat rallied 13 1/4 cents, or 2.6%, to US$5.29 1/2.

 

Prices bounced after finishing down about 2% Thursday. The markets have traded in a back-and-forth pattern this week, alternating higher and lower closes.

 

Noncommercial speculative funds hold a large net short position in CBOT wheat, which leaves the door open for sharp rallies. The upside looks limited because large supplies and stiff competition for export business are fundamentally unsupportive, a trader said.

 

Commodity funds bought an estimated 3,000 contracts in CBOT wheat and also were buyers in neighboring corn and soy. Gains in the neighboring and outside markets and weakness in the U.S. dollar created a bullish psychology for wheat, said Greg Wagner, senior commodity analyst for AgResource Co.

 

CBOT May wheat faces upside resistance around US$5.25, which is near its 50-day moving average, Wagner said. A move above that price would put the next resistance level around US$5.38, which is just below the 100-day moving average, he said.

 

 

Kansas City Board of Trade

 

KCBT May wheat ended up 11 3/4 cents on the week.

 

There are expectations that funds will be buyers Monday as they have typically been buyers at the start of months, traders said. That created a "trading environment where people were well aware that bears weren't going to press their case anyway, in consideration of historical patterns for funds to come in," Wagner said.

 

 

Minneapolis Grain Exchange

 

MGE May wheat closed up 10 cents on the week.

 

There are worries that heavy snow on the ground in the northern U.S. Plains may cause flooding and delay the spring planting season. The concerns have mostly been talked about in regard to corn, but spring wheat also is planted in the region. Cool, wet weather seriously delayed spring wheat planting last year, and farmers still produced a big crop.