US Wheat Review on Friday: Bounces on technical buying, soft dollar

 

 

U.S. wheat futures rose Friday on technical buying and weakness in the U.S. dollar, although the markets faded into the close.

 

Chicago Board of Trade May wheat closed up 12 cents at US$5.27 a bushel, up 5 1/2 cents on the week. Kansas City Board of Trade May wheat finished up 14 cents at US$5.74, and Minneapolis Grain Exchange May wheat gained 12 1/2 cents to US$6.13.

 

Wheat saw a technical bounce following recent selling, analysts said. The markets fell hard earlier in the week on pressure from weak outside markets, including equities and crude oil.

 

"I think technicals are certainly part of it," Dave Marshall, an independent commodity broker and marketing advisor, said about Friday's recovery. "We've had all of these markets pretty terrifically oversold for some time."

 

There was some short-covering and positioning ahead of the weekend and before a U.S. Department of Agriculture supply/demand report due out Wednesday, analysts said. The report will include fresh estimates on U.S. 2008-09 ending stocks.

 

"Going into this March report, we seem to want to put lows in on Monday and then rally thereafter," Marshall said.

 

A soft dollar helped boost wheat as it makes U.S. grains more attractive to foreign buyers, traders said. CBOT corn and soybeans also settled higher.

 

The markets trimmed gains into the close, with CBOT May wheat shedding about 6 cents in the final 10 minutes. Commodity funds bought an estimated 2,000 wheat contracts at the CBOT.

 

 

Kansas City Board of Trade

 

Dryness in the U.S. Plains states continues to be a concern for hard red winter wheat, analysts said. Warm weather in the region is encouraging the crop to break dormancy and increasing the need for moisture, they said.

 

There is a chance for rain late next week or next weekend, especially across Texas and southern Oklahoma wheat areas, T-Storm Weather said in an update to its daily forecast. However, "a number of unresolvable issues exist since the potential" event is six to eight days away, the private weather firm said.

 

Kansas and Oklahoma received less than 40% of average precipitation from January to February, which "exemplifies the need for rain - especially given recent/ongoing warmth," T-Storm said. Worries about the lack of precipitation are a "lingering" supportive factor underpinning U.S. wheat futures, Marshall said.

 

KCBT May wheat closed up 14 cents on the week.

 

 

Minneapolis Grain Exchange

 

The markets were due for a bounce after recent losses, traders said. The weak dollar provided some outside support amid a lack of fresh fundamental news, they said.

 

"After you've been beating up markets as badly as we have for so long, there's a point where you need to take a break," a broker said.

 

MGE May wheat closed up 6 3/4 cents on the week. U.S. wheat futures next week should continue to watch the outside markets and will likely see more positioning ahead of the release of the USDA data, Marshall said.