US Wheat Review on Thursday: Rallies to close near Thursday highs

 

 

U.S. wheat futures gained strongly Thursday, lifted by positive export sales and strengthening crude oil.

 

Chicago Board of Trade May wheat gained 16 3/4 cents to US$5.25 per bushel. The contract traded in a 15 1/2-cent range, topping at US$5.26. July wheat gained 17 cents to US$5.37 1/4. KCBT May wheat rose 15 cents to US$5.76. MGE May wheat added 12 1/4 cents to US$6.17 3/4.

 

Speculative funds bought an estimated 3,000 CBOT wheat contracts, according to mid-day estimates.

 

The agricultural markets saw a "dead-cat bounce Thursday after a hard down yesterday on sobering upward adjustments to world grain stocks," said Richard Feltes, director of research at MF Global.

 

In a daily market commentary, Feltes says he saw support in higher crude oil, gold and export sales.

 

U.S. export sales totaled 399,200 metric tonnes, according to a report released Thursday by the U.S. Department of Agriculture. The sales figure was in line with analyst expectations that ranged from 200,000-500,000 metric tonnes.

 

The 14.6 million bushels shipped in the week ended March 5 included 13.3 million bushels of old crop wheat.

 

This week's trade has been "very normal," said Tim Hannagan, a senior analyst at Alaron.

 

Short-covering was expected up to Wednesday's updated supply and demand report from the U.S. Department of Agriculture.

 

"Yesterday the breaks off the highs were a little bigger than normal because crude kept breaking all day, pulling grains down," Hannagan said.

 

Thursday, the opposite trend unfolded.

 

Analysts expected the agricultural complex to reclaim some of what it gave up Wednesday.

 

"Today when we came in, everything looked bullish - export sales were bullish for corn, wheat and soybeans, crude oil was higher," Hannagan said.

 

"We expected to open higher and hold gains, but then crude oil kept going higher, pulling the grains even higher."

 

 

Kansas City Board of Trade

 

Prices for hard red wheat contracts were pulled higher on the strength of outside markets, said traders cited in market commentary from the Kansas City Board of Trade.

 

While much-needed rain is falling in areas of Oklahoma and Texas, dry areas out west are in still in need of moisture, the traders said.

 

Southwestern Plains weather is still supportive for wheat, but markets shouldn't expect any sustained follow through with world wheat carryover now equal to 88 days of usage -- up 17 days from last year," MF Global's Feltes said.

 

That is the highest level since 2005, he said.

 

 

Minneapolis Grain Exchange

 

Traders of MGE hard spring wheat contracts maintained the front month's premium to the deferred months.

 

March contracts closed at a 16 3/4-cent premium to the May, 2 1/2 cent tighter than Wednesday's inverse spread.

 

Traders and analysts cite tight deliverable stocks for the added March premium.