US Wheat Review on Thursday: Closes higher on weak dollar, fund buying

 

 

U.S. wheat futures rallied Thursday as weakness in the U.S. dollar and fund buying overshadowed poor export demand, analysts said.

 

Chicago Board of Trade May wheat jumped 25 1/4 cents to US$5.55 1/4 per bushel. Kansas City Board of Trade May wheat climbed 23 cents to US$6.06, and Minneapolis Grain Exchange May wheat rose 20 1/2 cents to US$6.39 1/4.

 

The dollar sank after the Federal Reserve on Wednesday said it will buy US$300 billion in longer-dated Treasurys and another US$850 billion in mortgage-related debt. There was a "mental perception that [the soft dollar] was going to be good for exports" because it makes U.S. grain less expensive for foreign buyers, said Joe Victor, vice president of marketing for Allendale.

 

CBOT May wheat closed near its session high of US$5.59. Commodity funds bought an estimated 3,000 contracts at the CBOT.

 

Fundamentals, meanwhile, had a bearish slant, traders said. Total U.S. weekly wheat export sales of 235,800 tonnes were poor and at the low end of trade expectations for 200,000 tonnes to 550,000 tonnes, they said.

 

The markets could encounter some profit-taking Friday ahead of the weekend, Victor said. Traders will keep an eye on the dollar and outside markets, including stocks and crude oil, a trader said.

 

 

Kansas City Board of Trade

 

KCBT wheat rose on the falling dollar as markets digested the Fed's announcements from Wednesday, a floor trader said. The soft dollar helped KCBT wheat shrug off the "weak" export data and forecasts for rain in dry areas of the U.S. southern Plains, he said.

 

More rain than previously expected should hit portions of the Plains hard red winter wheat belt Sunday through Tuesday, World Weather Inc. said in a forecast. KCBT wheat will likely come under some pressure Monday if the rains do not materialize, a KCBT trader said.

 

"Central and western Kansas will get some dryness relief," World Weather said. "Much more precipitation will be needed before the recent drier bias is no longer a market concern."

 

There was some fund buying and short-covering of roughly 500 contracts to 1,000 contracts on the close, a floor trader said. The dealings were mostly in the nearby May contract month, with "a little bit spilling back into July," he said.

 

 

Minneapolis Grain Exchange

 

MGE wheat rose as weakness in the dollar spurred rallies in commodities, traders said. Fundamentals took a back seat to the outside markets, they said.

 

There was continued market chatter about the potential for flooding in crop areas of North Dakota. North Dakota has received 200% of normal precipitation in the most recent 90 days, according to Allendale.