US Wheat Review on Monday: Ends slightly up, but pares gains

 

 

Short-covering lifted U.S. wheat futures Monday, but the markets finished below the day's highs because of both a lack of conviction among traders ahead of a key government crop report and a dearth of fresh news.

 

Chicago Board of Trade May wheat ended up 2 3/4 cents, or 0.6%, at US$4.86 1/2 per bushel. Kansas City Board of Trade May wheat rose 2 cents, or 0.4%, to US$4.94. Minneapolis Grain Exchange May wheat edged up 2 cents, or 0.4%, to US$5.11 1/4.

 

CBOT wheat is susceptible to bursts of short-covering because noncommercial speculative funds, which follow trends in the markets, are heavily short. Funds that are short buy back, or cover, previously sold positions when the net short position becomes too large.

 

"The market continues to try to confirm some sort of bottom, so we get these short-covering bounces," said Bryce Knorr, market analyst for Farm Futures. "Overall, it was just very thin."

 

CBOT May wheat trimmed gains after hitting a session high of US$4.92 3/4. It looked as though there was "profit-taking after good and fairly unexpected gains," Knorr said.

 

Large supplies and stiff competition for export business are fundamentally unsupportive. U.S. wheat is considered too expensive to be competitive to such price-conscious buyers as Egypt.

 

Commodity funds sold an estimated 2,000 contracts at CBOT.

 

 

Kansas City Board of Trade

 

KCBT wheat pared gains after hitting a session high of US$5. That price offers technical and psychological resistance, a trader said.

 

The markets were unable to sustain their gains because "nobody has a great deal of conviction to take those trades home overnight," Knorr said. There is uncertainty in the grain and soy markets ahead of the U.S. Department of Agriculture's prospective plantings reports due out March 31. Trading should remain choppy until the report comes out, he said.

 

 

Minneapolis Grain Exchange

 

MGE May wheat closed below its session high of US$5.17 3/4.

 

The Red River on Sunday crested in Fargo, N.D., after warm weather had melted heavy snow pack last week. The region is a growing area for spring wheat, corn and soy, but the flooding will not delay spring planting on its own, meteorologists said. Wet weather next month in the northern Plains could slow seeding, which begins for spring wheat in late April, they said.