US Wheat Review on Friday: Rises in technical bounce; Minneapolis Grain Exchange leads gains

 

 

U.S. wheat futures strengthened Friday on suspected short covering and in a rebound from recent weakness, although traders said it will be tough to sustain the gains.

 

Chicago Board of Trade May wheat ended up 6 1/2 cents, or 1.4%, at US$4.85 1/4 a bushel. Kansas City Board of Trade May wheat rose 5 1/4 cents, or 1.1%, to US$4.94 3/4. Minneapolis Grain Exchange May wheat climbed 9 cents, or 1.8%, to US$5.13 1/2.

 

Prices jumped after CBOT May wheat on Thursday fell to a fresh five-month low and KCBT and MGE wheat set contract lows. The markets were short-term oversold and due for a bounce, a trader said.

 

CBOT wheat is susceptible to short covering because non-commercial speculative funds hold a large net short position. Short-covering rallies can be sharp, but the wheat markets will struggle to sustain gains because fundamental factors are unsupportive, a trader said.

 

World supplies are comfortable, and U.S. wheat is too expensive to be competitive for sales to price-conscious buyers, analysts said. The U.S. Department of Agriculture on Wednesday raised its forecast for 2009-10 U.S. ending stocks to a 22-year high of one billion bushels.

 

Commodity funds bought an estimated 3,000 wheat contracts at CBOT, traders said.

 

CBOT May wheat ended down 8 1/4 cents, or 1.7%, on the week.

 

 

Kansas City Board of Trade

 

KCBT May wheat ended down 5 3/4 cents on the week.

 

Prices rose Friday in a technical bounce from Thursday's slide to a fresh contract low in KCBT wheat, a trader said. There was a lack of fresh fundamental news to underpin the gains.

 

 

Minneapolis Grain Exchange

 

MGE wheat has been building its premium over CBOT and KCBT wheat lately and continued that trend Friday. The May contract ended up 1 1/4 cents on the week.

 

There is uncertainty about plantings of U.S. hard red spring wheat in the coming months because of competition from other crops such as corn and soy. Traders are waiting for the USDA to issue its prospective plantings report March 31.