April 3, 2008

 

US Wheat Review on Wednesday: Soars after recent losses; Minneapolis Grain Exchange rises limit

 

 

U.S. wheat futures closed solidly higher Wednesday, with the nearby Minneapolis Grain Exchange contract ending limit up as the markets bounced following recent sell-offs, traders said.

 

Chicago Board of Trade May wheat rose 41 1/2 cents higher to US$9.36 1/2 per bushel, and Kansas City Board of Trade May wheat jumped 36 cents to US$9.86. Minneapolis Grain Exchange May wheat finished limit up, or 60 cents higher, at US$12.15.

 

The markets were in an oversold condition after recent setbacks and due for a rebound, traders said. Wheat recently weakened on expectations for a big global crop and on a higher-than-expected U.S. Department of Agriculture estimate for quarterly wheat stocks.

 

"We sold it off pretty significantly," said Mike Krueger, president of The Money Farm.

 

Spillover support from firmer CBOT corn and soybeans helped boost wheat, traders said. Wheat is seen as a follower, they said.

 

Wheat should continue to keep an eye on the other markets, particularly corn, moving forward, Krueger said. The outlook for corn is considered bullish as wet weather is delaying planting in the Midwest. There are also concerns about excessive precipitation in soft red winter wheat areas, Krueger said.

 

"People are just a little bit concerned because you're whittling away at acres because of flooding," he said.

 

There was some support from news that private exporters sold 120,000 metric tonnes of U.S. soft red winter wheat to Egypt for delivery in the 2008-09 marketing year, Krueger said. However, the impact of the sale was diminished because it was for the new crop, a CBOT floor trader said.

 

Commodity funds bought an estimated 3,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

KCBT wheat futures followed CBOT wheat and corn, traders said. Worries about dry weather in hard red winter wheat areas of the western Plains remain supportive for the market, they said. The likelihood of wheat acreage abandonment in the Texas Panhandle is high due to the dryness, according to DTN Meteorlogix.

 

"The outlook keeps generally dry weather in place over a corridor of the western Plains, from the Texas Panhandle north to Montana and the Dakotas," the private weather firm said.

 

 

Minneapolis Grain Exchange

 

MGE May wheat rose limit up, or 60 cents higher, on short-covering by locals and a lack of selling, a floor broker said. The contract was not trading synthetically higher at the close, he said. MGE July wheat briefly traded limit up before trimming gains.

 

Along with the western plains, spring wheat regions of the northern Plains also are dry. Concern is building over the prospect of low soil moisture for spring wheat seeding, Meteorlogix said.

 

There was further support for the market from improving basis levels for spring wheat, an analyst said. There was some commercial buying on the May, July and September contracts, a floor broker said.