April 5, 2008

 

US Wheat Review on Friday: Up on short-covering; Minneapolis Grain Exchange may rises limit

 

 

U.S. wheat futures ended higher Friday on technical buying and short-covering, with the nearby Minneapolis Grain Exchange contract closing limit-up for the third consecutive day.

 

Chicago Board of Trade May wheat rose 37 1/4 cents to US$9.74 1/4 per bushel. Kansas City Board of Trade May wheat jumped 32 1/4 cents to US$10.28 1/2, and MGE May wheat closed limit up, 60 cents higher, at US$13.35.

 

There are ideas wheat is still in an oversold condition after a sizable sell-off last month, analysts said. The markets' continued to rebound and triggered buy stops on the way up, traders said.

 

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

 

There is supportive talk about a pick-up in demand following the recent break, traders said. Concerns about dryness in the western U.S. Plains also remain bullish, an analyst said.

 

"It's hard to be really short with the kind of weather forecasts we have, as well as the demand situation we have worldwide," said Dave Marshall, an independent marketing advisor and commodities broker.

 

On Wednesday, the U.S. Department of Agriculture will issue its April supply and demand report. Most adjustments in the reports should simply confirm changes the USDA made in the quarterly stocks report, issued last Monday, analysts said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures jumped on technical buying, with some outside spillover support seen from the MGE, traders said. There was not much fresh news out, but the worries about the persistent dryness in the western Plains continued to underpin the market, they said.

 

The USDA on Monday will begin issuing weekly crop progress reports. Traders are waiting to see how the agency rates the wheat amid concerns about the Plains dryness and excessive wetness in parts of the Midwestern soft red winter wheat belt.

 

 

Minneapolis Grain Exchange

 

Limit-up MGE May wheat was synthetically trading between US$14.40 and US$14.60 at the close, a trader said. The July contract also briefly rose the 60-cent limit before closing up 53 1/4 cents at US$11.58 1/4.

 

Bull spreading boosted nearby MGE May wheat, a floor trader said. ADM was noted as active in the spread, he said.

 

Shorts are getting out of the MGE May contract amid memories of the record-breaking run-up in MGE March wheat in late February, an analyst said. MGE March wheat stormed to US$25 per bushel in late February on tight supplies and as shorts scrambled to escape the market.

 

"The shorts that are in the May felt pretty comfortable when we were knocking the market down pretty hard," said Shawn McCambridge, analyst for Prudential Bache. "Since we've turned higher they're still remembering what happened with the March when we went into delivery. They just don't want to get caught in that kind of situation again."