US Wheat Review on Wednesday: Jumps on technical buying, weak dollar

 

 

U.S. wheat futures jumped Wednesday and closed near session highs on technical buying and supportive signals from other markets, with background strength seen from worries about wet conditions.

 

Chicago Board of Trade May wheat finished up 9 cents, or 1.8%, at US$4.96 a bushel. Kansas City Board of Trade May wheat ended 7 1/2 cents, or 1.5%, higher at US$5.02 1/4. Minneapolis Grain Exchange May wheat jumped 6 3/4 cents, or 1.3%, to US$5.20 1/4.

 

Prices rose for the second day amid sentiment the markets were technically oversold, said Jerry Gidel, analyst for North America Risk Management Services. Short-covering helped accelerate gains as speculative funds are heavily short in CBOT wheat, a trader said.

 

CBOT May wheat approached psychological resistance at US$5 and closed near its 20-day moving average around US$4.98 3/4. Its session high was US$4.98 1/4.

 

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

 

 

Kansas City Board of Trade

 

KCBT May wheat finished near its session high of US$5.05. Wheat closed higher with neighboring CBOT corn and soy.

 

A retreat in the U.S. dollar and gains in the other markets helped support wheat, traders said. A soft dollar is often seen as supportive because of perceptions it makes U.S. grains more attractive to foreign buyers.

 

The U.S. continues to face stiff competition for export sales to price-conscious buyers, notably from countries in the Black Sea region and Europe. World wheat supplies are at an eight-year high, and U.S. wheat stocks are at a 22-year high.

 

 

Minneapolis Grain Exchange

 

Worries about the potential for wetness to slow U.S. spring wheat planting supported MGE hard red spring wheat futures, an analyst said. The CBOT and KCBT, respectively, trade soft red winter and hard red winter wheat, which are planted in the autumn.

 

Melting snow in the northern Plains has caused flooding in some parts of the Red River Valley, a planting area for spring wheat, corn and soy. Producers said precipitation during the next month could delay planting, but others said it was too early to worry about spring wheat seeding, which typically begins in late April.

 

"I think there is an issue about spring wheat," Gidel said. "I think it's definitely strong background information. I wouldn't say its right on the tip of the tonnegue."