March 29, 2007

 

US Wheat Review on Wednesday: Shakes off losses to close mostly higher

 

 

U.S. wheat futures finished mostly higher Wednesday, shaking off early losses on technical buying amid a late rally in the Chicago Board of Trade soybean market, traders said.

 

Chicago Board of Trade May wheat closed 2 1/2 cents higher at US$4.56 1/2 per bushel. Kansas City Board of Trade May wheat ended up 1/4 cent at US$4.70 1/2, and Minneapolis Grain Exchange May wheat finished up 3 1/4 cents at US$4.99.

 

Technical buying, along with some spillover strength from soybeans, gave wheat a boost near the end of the day session, floor traders said. The market was due for a bounce after recent losses, they said.

 

There was also some short-covering ahead of the release of the U.S. Department of Agriculture's prospective planting and grain stocks report, a CBOT floor trader added. Trading was choppy as some market participants sat on the sidelines before the reports come out at 8:30 a.m. EDT Friday, he said.

 

The USDA is expected to lower its estimate for some U.S. spring wheat acres because of a shift of farmland to corn, analysts said. It also is expected to drop its estimate for U.S. wheat stocks as of March 1 because of slightly higher exports, a slowdown in imports and reports of some feedyards feeding wheat to cattle, the analysts said.

 

Fundamental factors for wheat remain bearish as the winter wheat crop looks to be in good shape, added Bill Nelson, analyst with AG Edwards & Sons.

 

"I have a hard time picking out a strong bullish fundamental," he said. "We continue to look at these improving winter wheat condition ratings."

 

Wheat futures opened higher on follow-through buying from overnight gains and with support from strength in other markets, including crude oil, traders said. Bulls were unable to sustain the advances by midday, however, and prices stumbled into negative territory, they added.

 

In CBOT pit trades, Rand Financial and RJ O'Brien each bought 500 May, while Prudential sold 600 May. Fortis sold 400 May, and Fimat sold 300 May.

 

 

Kansas City Board of Trade

 

Wheat tested both sides in lackluster, featureless activity at KCBT, a floor trader said. There was not much fund activity, he noted.

 

"We pretty much just chopped around," he said.

 

Showers and temperatures above normal are continuing in the Southern Plains, after a half an inch of rain fell Tuesday night in scattered locations from Nebraska to Texas, DTN Meteorlogix reported. Thunderstorms are expected Wednesday and into Thursday and Friday, the weather firm said.

 

Rainfall amounts are forecast by DTN Meteorologix to be one half to two inches, mostly in the south-central and southeast areas. Severe weather is a possibility, the firm said, although the weekend should see a return to drier conditions.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures felt early support from strength in crude oil futures amid rising Middle East tensions, a floor trader said. A "little bit of nervousness there allowed us to open a little better," he said.

 

There was some inter-market spreading later in the session with traders buying Minneapolis and selling Chicago, the trader said.

 

Wheat rallied late in the session with CBOT soybeans and "just kind of kept up," he said. Volume was inconsistent overall, he said.

 

"Everybody's just sitting and kind of waiting for the (USDA) report to come out," the trader said.