March 25, 2008

 

US Wheat Review on Monday: Ends firmer on technical rebound

 

 

U.S. wheat futures closed firmer Monday in a technical rebound from steep losses last week, analysts said.

 

Chicago Board of Trade May wheat closed 32 1/2 cents higher at US$10.20 per bushel. Kansas City Board of Trade May wheat finished 36 1/2 cents higher at US$10.68 1/2, and Minneapolis Grain Exchange May wheat ended up 42 1/4 cents at US$13.19 1/4.

 

Wheat futures bounced after coming under pressure last week from jitters about the economy and weakness in financial markets. The stabilization of outside financial markets gave wheat bulls the encouragement to get off the sidelines, an analyst said.

 

Fund and technical buying supported the gains. Funds bought an estimated 2,000 contracts at the CBOT.

 

There was little fresh fundamental news out, traders said. Turkey's state grain board issued a tender Friday to buy 250,000 metric tonnes of milling wheat. The bidding deadline is March 26, and shipment is sought by the end of April. Turkey on March 19 said it bought a total of 190,000 tonnes of milling wheat after issuing an earlier tender for 500,000 tonnes. Some 30,000 tonnes was from Kazakhstan and the remaining from European Union countries.

 

Traders are waiting for the U.S. Department of Agriculture to release its prospective plantings projections on March 31. The USDA also will issue quarterly grain stocks estimates.

 

"Right now, I'm not sure there's a lot of straightforward fundamental news in the wheat market," said Jerry Gidel, analyst for North America Risk Management Services. "There's probably some uncertainty about what kind of acreage numbers you're going to get."

 

 

Kansas City Board of Trade

 

Volume at the KCBT was light, traders said. There was some late buying of KCBT July wheat to tighten up the old crop/new crop spread, a KCBT floor trader said.

 

Wheat areas of the Plains this week should see very warm temperatures, very little rain and strong winds, DTN Meteorlogix said. The conditions will stress the fledgling crop in its post-dormant phases, the private weather firm said.

 

"Weather issues are still going to be important for the U.S. crop," Gidel said. "There's a need a focus on where the dryness is, but don't forget there are also areas where (moisture) is very good."

 

 

Minneapolis Grain Exchange

 

The markets rose in a technical reaction to an oversold condition, a MGE floor trader said. Trading was thin, and volume was "nothing to write home about," he said.

 

There are some concerns about the impact of dryness on China's wheat crop, the trader said. Drought has affected the growth of winter wheat and will threaten spring planting in China, according to the Ministry of Agriculture.