US Wheat Review on Wednesday: Rally on technical buying, dollar slide

 

 

U.S. wheat futures ended with strong gains Wednesday on supportive outside market factors and technically inspired buying.

 

May CBOT wheat ended 11 1/4 cents, or 2.23%, higher at US$5.15 3/4; May KCBT wheat settled 9 1/2 cents, or 1.87%, higher at US$5.18; and May MGE wheat finished 9 3/4 cents, or 1.89%, higher at US$5.27.

 

The sharp drop in the U.S. dollar provided a psychological boost to prices on perceptions that it increases investors' appetite for risk and makes U.S. grain more competitive in world markets, analysts said.

 

Technically inspired buying played a role in the session's gains as well, with the ability of the market to hold above recent lows attracting buyers. The CBOT May contract was able to hold support at its 20-day moving average, a positive technical signal to go along with a commodity-friendly drop in the U.S. dollar, a trader said.

 

However, despite the price bounce, futures failed to break out of a sideways trading pattern on technical charts. Bearish world supply-side fundamentals coupled with sluggish U.S. wheat export demand remained defensive features limiting upside potential.

 

In CBOT trades, speculative fund buying was estimated at 3,000 lots.

 

On tap for Thursday the U.S. Department of Agriculture's weekly export sales report will be released at 8:30 a.m. EST. Analysts surveyed by Dow Jones Newswires estimate wheat sales for the week ended Feb. 25 to be in the range of 250,000 to 550,000 metric tonnes.

 

 

Kansa  City Board of Trade

 

KCBT wheat ended higher, following the lead of Chicago wheat in the absence of fresh fundamental news, a KCBT wheat trader said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures ended higher, in line with other wheat markets. The slide in the U.S. dollar and technical buying combined to underpin prices, traders said.