March 26, 2008

 

US Wheat Review on Tuesday: Rises on support from other markets

 

 

Spillover support from neighboring and outside markets pushed U.S. wheat futures higher Tuesday as the grains continued to recover from sharp losses last week, analysts said.

 

Chicago Board of Trade May wheat climbed 47 1/2 cents to US$10.67 1/2. Kansas City Board of Trade May wheat soared 50 1/2 cents to US$11.19, and Minneapolis Grain Exchange May wheat rose 30 3/4 cents to US$13.50.

 

Limit-up rallies in CBOT soybeans and corn helped boost wheat as commodity funds returned as buyers of the markets, traders said. Weakness in the U.S. dollar and gains in gold also were seen as supportive.

 

Agricultural commodities, including wheat, last week slumped as jitters about the economy weakened financial markets and sparked fears that grains could slip into a downtrend. Now, "the economic situation on the outside looks a little more stable and more money is flowing into the market," said Shawn McCambridge, analyst for Prudential Bache in Chicago.

 

"It's kind of a Dr. Jekyll and Mr. Hyde kind of attitude," McCambridge said. "Today is just kind of a reverse mirror image of what was going on last week."

 

Investment money that wanted to put on a long position, or a bet that prices will rise, after soybeans and corn climbed limit up had to look to a neighboring market like wheat, an analyst said. Commodity funds bought an estimated 3,000 contracts at the CBOT.

 

There was not much fresh fundamental news for wheat. Traders are looking ahead to the release of the U.S. Department of Agriculture's prospective planting and quarterly grain stocks estimates on Monday.

 

 

Kansas City Board of Trade

 

Volume was light at the KCBT, with few traders interested in taking on positions, a floor broker said. A lack of news and the impending USDA reports may be keeping people on the sidelines, he said.

 

Along with waiting for the government crop reports, traders also will continue to watch the weather, said Sid Love, analyst for Kropf & Love Consulting. Precipitation in the Central and Southern plains continues to be mostly below normal, especially in western areas, DTN Meteorlogix said.

 

"The crop's good in the corn belt; it's less than that in the Plains," Love said. "The eastern half of Kansas and Nebraska are in pretty good shape. I think the High Plains could still use more moisture."

 

 

Minneapolis Grain Exchange

 

MGE wheat futures were a follower of activity at the CBOT, an MGE floor trader said. The early limit-up rally in soybeans "definitely got things going," he said.

 

There was light buying from commercials during the session amid ideas they may have been lured into the market by last week's break, traders said. Positioning ahead of Monday's USDA report is expected later in the week, they said.

 

"Right now we're just kind of taking back the losses that we had last week," an MGE trader said.