April 4, 2008

 

US Wheat Review on Thursday: MGE may rises by 60-cent limit for 2nd day

 

 

U.S. wheat futures ended higher Thursday, with the nearby Minneapolis Grain Exchange contract surging the exchange-imposed limit of 60 cents on commercial spreading, traders said.

 

Chicago Board of Trade May wheat ended 1/2 cent higher at US$9.37 per bushel, Kansas City Board of Trade May wheat closed 10 1/4 cents higher at US$9.96 1/4, and MGE May wheat settled limit up, or 60 cents higher, at US$12.75.

 

The markets extended gains from Wednesday as they watched the rally in MGE May wheat and strength in the neighboring CBOT corn market, an analyst said. The markets are also keeping an eye on the weather amid concerns about dryness in western areas of the U.S. Plains and excessive rain in the Midwest, they said

 

"In Chicago wheat and in Kansas City wheat, there are some weather issues that are damaging to the crop right now," said Jason Ward, analyst for Northstar Commodity. "I think that is supportive."

 

Demand was another friendly factor for bulls, with Turkey tendering to buy 100,000 tonnes of optional-origin milling wheat, an analyst said. There are ideas that a recent sell-off in wheat may bring more export business to the U.S., he said.

 

"End users are filling in on price weakness," said Mike Zuzolo, analyst for Risk Management Commodities. "They're filling in needs."

 

Volume was considered thin at all three exchanges. Commodity funds bought an estimated 1,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

  

The rally in MGE May wheat helped lift prices at the KCBT, and there wasn't much else for the market to feed on, a KCBT floor trader said. Worries about dryness in hard red winter wheat areas of the U.S. western Plains continue to provide underlying support, he said.

 

"It's still a reason not to break but it's not a rallying cry," the KCBT trader said about dryness concerns.

 

 

Minneapolis Grain Exchange

  

Limit-up MGE May wheat was bid around US$13.20 toward the close but wasn't trading synthetically higher, a MGE floor trader said. Bull spreading helped carry the contract up 60 cents, traders said.

 

Commercials became more aggressive in bidding the MGE May/July, a MGE trader said. They had established a base of about US$1.55 for the spread, but it widened Thursday and eventually closed at US$1.70, he said.

 

MGE May wheat has climbed the exchange-imposed limit of 60 cents for the past two day sessions but probably won't explode as the March contract did in late February, analysts said. MGE March wheat in February hit a record US$25 per bushel on dwindling supplies and shorts escaping from the market. However, shorts have now probably learned their lesson and won't become trapped again, analysts said.