March 11, 2008

 

US Wheat Review on Monday: Rallies ahead of USDA supply/demand data

 

 

Positioning ahead of a government crop report pushed U.S. wheat futures higher Monday after the markets tumbled in early trading, analysts said.

 

Chicago Board of Trade May wheat surged 58 cents to US$11.63 per bushel. Kansas City Board of Trade May wheat soared 32 cents to US$12.01, and Minneapolis Grain Exchange May wheat jumped 26 3/4 cents to US$13.46 1/2.

 

CBOT wheat futures briefly traded limit up, or 60 cents higher, before trimming gains a bit at the close. There were some traders covering short positions before the U.S. Department of Agriculture releases its March supply and demand report at 8:30 a.m. EDT Tuesday, analysts said.

 

Some analysts expect the USDA will drop its wheat carryout estimate further from historically low levels due to solid export demand. The average of trade estimates for carryout is 263 million bushels, down from 272 million in February, according to a Dow Jones Newswires survey of 14 analysts.

 

Strong gains in corn also helped boost wheat, said Brian Hoops, president of Midwest Market Solutions. The gains also may have been a turnaround from a sell-off Friday, an analyst said. Commodity funds bought an estimated 4,000 contracts.

 

Wheat futures tumbled in early activity Monday amid spillover pressure from limit-down losses in the CBOT soy complex, traders said. CBOT soybeans came off limit down and ended well off their session lows, allowing wheat to advance, a trader said.

 

 

Kansas City Board of Trade

 

Positioning ahead of the USDA report helped pull KCBT wheat futures higher, a trader said. Volume was not particularly heavy, he noted.

 

There was not much fresh news out for the wheat markets, traders said. Weekly U.S. wheat export inspections were 18.122 million bushels, within the 16 million to 21 million bushels expected by analysts.

 

Scattered showers and thundershowers of 0.25-1.00 inch, with locally heavier total, fell across central and East Texas on Sunday night, DTN Meteorlogix said. Showers also reached to southern Oklahoma, but little precipitation fell in other areas during the weekend, the private weather firm said. - This week, precipitation is expected to average near to above normal in the northern and eastern Plains, and near to below normal in the southwest Plains. Temperatures are expected to be near to above normal until Friday, Meteorlogix said.

 

 

Minneapolis Grain Exchange

 

MGE May wheat ended solidly higher after almost trading limit down, or 90 cents lower, in early activity. The contract had a huge range of US$1.35 for the day.

 

MGE May wheat felt early pressure from the limit-down losses in CBOT soybeans and soyoil, traders said. The turnaround was led by the CBOT and came as a rebound from recent weakness ahead of the USDA report, they said.

 

The daily trading limit for MGE hard red spring wheat futures remains 90 cents, up from the default 60-cent limit after two old-crop contracts ended limit up Friday. The CBOT, KCBT and MGE raised their default limits to 60 cents from 30 cents last month and said they would increase limits by 50% if at least two contracts within the same crop year ended at limit bid or limit offer. The daily price limit will revert back to 60 cents after no wheat futures contract month closes limit bid or limit offer for three consecutive business days.