March 1, 2007

 

US Wheat Review on Wednesday: Higher on corn rally, short covering

 

 

U.S. wheat futures finished higher Wednesday, making new highs on the close as double-digit gains in corn futures and short-covering on the close helped erase earlier modest losses, a floor trader said.

 

CBOT May wheat gained 4 1/2 cents to US$4.88, KCBT May wheat rose 8 3/4 cents to US$5.15 1/2, and MGE May wheat settled 4 cents higher at US$5.20 a bushel.

 

End-of-month fund positioning also added to the late strength, the floor trader added.

 

Participants who sold Tuesday came in to cover late when corn extended its gains and soybeans rallied, said Jack Scoville, a vice president with Price Futures Group in Chicago.

 

Some traders were hesitant to sell ahead of the USDA's Outlook Forum Thursday and Friday, and when corn rallied to its highs, traders stepped up and bought wheat, a commission house analyst said.

 

Deliveries were heavier than expected in Chicago, overall demand is weak and there is moisture forecast for the hard red and soft red winter wheat belts, but the rally in corn was enough to push wheat higher, a floor broker said.

 

Despite the gains, wheat looks like it remains in a bearish downtrend and could see some technical weakness on Thursday, the floor broker added.

 

On daily open auction technical charts, CBOT May traded an inside day, between the highs and lows established Tuesday. In CBOT trades, JP Morgan bought 400 May, and Shatkin Arbor sold 300 May.

 

 

Kansas City Board of Trade

 

Hard red winter futures settled higher and at or near their highs of the session, as the lack of deliveries against the spot-month March contract helped lead the market higher, a KCBT floor analyst said. Spot-month March rallied 18 1/2 cents and settled at an inverse, or higher than May, the next contract month. Short-covering and the rally in CBOT corn also added to the gains, the analyst added.

 

In KCBT trades, Prudential sold 500 May, ADM sold 200 July, and JP Morgan sold 300 May.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures finished higher as end-of-month fund position squaring and the rally in corn futures helped lead prices higher, a floor broker said. The funds came in late and supported the market, he added.

 

A slowdown in country movement after the recent price volatility also provided some support, a trader said.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales for the week ended Feb. 22. Analysts expect wheat export sales between 250,000 to 450,000 metric tonnes. Sales for the week ended Feb. 15 totaled 475,800 tonnes.