US Wheat Review on Tuesday: Surges late with corn, soy; funds buy

 

 

U.S. wheat futures closed sharply higher Tuesday after rallying late with Chicago Board of Trade corn and soybeans.

 

CBOT May wheat soared 20 1/4 cents to US$5.32 3/4 a bushel. Kansas City Board of Trade May wheat jumped 18 3/4 cents to US$5.73 1/4, and Minneapolis Grain Exchange May wheat surged 28 cents to US$6.39 1/4.

 

Fund buying and gains in the neighboring markets helped lift wheat, traders said. Nearby CBOT wheat, soybeans and corn futures contracts settled near session highs.

 

U.S. Department of Agriculture prospective plantings estimates issued Tuesday were seen as bullish for soybeans and mostly neutral for wheat, traders said. Export news wasn't supportive for wheat, they said.

 

Egypt booked Russian wheat in a tender, while Saudi Arabia booked mostly Canadian wheat in a tender, according to reports. U.S. prices are considered too high to be competitive on the global market, traders said.

 

Commodity funds bought an estimated 3,000 wheat contracts at the CBOT. Buying may have been associated with the end of the month and quarter, traders said.

 

 

Kansas City Board of Trade

 

The late rally in wheat was somewhat surprising because the markets had pulled back during the session after opening higher, a KCBT trader said. Wheat found strength from corn extending its gains and from supportive outside markets, he said.

 

"I think it caught a lot of people off guard the way it rallied and as sharply as it did," the trader said.

 

Wheat could extend its rally a bit Wednesday if the U.S. dollar is weaker and if equities and crude oil are stronger, a trader said. The grains have taken direction from outside markets recently amid concerns about inflation and the global economic crisis.

 

 

Minneapolis Grain Exchange

 

MGE wheat led the upside on USDA's estimate for reduced 2009-10 U.S. spring wheat acreage and on concerns that flooding in the northern Plains will cut plantings further, analysts said. The USDA pegged spring wheat plantings at 13.304 million acres, compared with the average trade estimate of 13.639 million and the 14.135 million planted in 2008.

 

"It felt like throughout the day that spring wheat was trying to rally a bit and we were being weighed down by the other two wheat markets," a MGE trader said. "Spring wheat was more than willing to run to the upside. The fact that the USDA came in at the low end of the range was supportive prices."

 

The rally in soybeans probably has more legs than the rally in wheat following the USDA reports, a trader said.

 

MGE wheat has "a lot of premium" over CBOT wheat, a trader noted. MGE trades hard red spring wheat, while CBOT trades soft red winter wheat and KCBT trades hard red winter wheat.