US Wheat Review on Tuesday: Rises on suspected short-covering, dollar

 

 

Suspected short-covering and supportive signals from other markets pushed U.S. wheat futures higher Tuesday as prices recovered from losses.

 

Nearby Chicago Board of Trade May wheat ended up 7 3/4 cents, or 1.6%, at US$4.87 per bushel. Kansas City Board of Trade May wheat rose 6 1/2 cents, or 1.3%, to US$4.94 3/4. Minneapolis Grain Exchange May wheat jumped 6 1/4 cents, or 1.2%, to US$5.13 1/2.

 

The markets bounced after falling Monday, and ended higher with neighboring CBOT soy and corn. It appeared short-covering boosted prices as non-commercial speculative funds hold a large short position in CBOT wheat, a trader said.

 

Trading volume wasn't heavy, traders said. Commodity funds bought an estimated 3,000 wheat contracts at CBOT.

 

PFG Best advises traders to "buy long lightly" if nearby CBOT May wheat closes above US$4.92 a bushel and "buy heavily" above US$5. There is major short-term support at the contract low of US$4.72, the firm said.

 

 

Kansas City Board of Trade

 

Weakness in the U.S. dollar and double-digit gains in soy helped create a positive tonnee for the wheat markets, a trader said. A soft dollar is often considered supportive because of the perception it makes U.S. grains more attractive to foreign buyers and increases investors' appetite for risk.

 

 

Minneapolis Grain Exchange

 

MGE wheat lagged behind the other markets a bit. Still, traders were keeping an eye on the potential for flooding of the Red River in eastern North Dakota and western Minnesota, a trader said.

 

 

The Red River Valley is a key producing area for spring wheat, sugar beets, corn and other crops. Spring planting is too far off to be affected by any near-term flooding, but precipitation in mid-April to mid-May would likely delay field work, producers said.