US Wheat Review on Tuesday: Climb on crop progress, technical buying

 

 

U.S. wheat futures climbed Tuesday, bouncing back from Monday's setback on supportive crop conditions and technically inspired buying.

 

July CBOT wheat ended 4 1/2 cents higher at US$5.20 3/4, July KCBT wheat settled 4 1/4 cents higher at US$5.72 1/4, and July MGE wheat finished 8 3/4 cents higher at US$6.22 1/2.

 

The combination of exhausted selling at current price levels and enough supportive issues found in Monday's weekly crop progress report from U.S. Department of Agriculture provided the spark to lift futures, said Shawn McCambridge, senior grains analyst with Prudential Bache in Chicago.

 

Lagging planting progress or the lack of planting in the spring wheat belt was the leading fundamental driver of prices, and with forecasts for wet conditions to linger in the area, futures found underlying strength.

 

Technical buying was featured in early action, as initial gains led by Chicago was an indication of a technical rally, as soft winter wheat traded in Chicago is doing fine, said McCambridge.

 

Meanwhile, freeze damage reported in Texas and Oklahoma were supportive features, with ideas Monday's setback was overdone coupled with strength from stabilizing outside markets providing an added boost to keep prices firmly underpinned.

 

As the session unfolded, Chicago and Kansas City wheat struggled to sustain the rally, as production declines are offset by a lack of export demand, McCambridge said. However, Minneapolis spring wheat has the best potential to stay firm in the short term, buoyed by slowing plantings and linger wet soils in the northern plains, McCambridge added.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said very warm weather developing in the Southern Plains by late week will increase stress to wheat in Oklahoma and west Texas. Wheat in Kansas, Colorado and southwestern Nebraska will benefit from warmer temperatures, after recent rains. Farther north, spring wheat acreage may be reduced because of flooding in North Dakota and northern Minnesota, with field work not likely for any operation until May 1 at the earliest.

 

In CBOT pit trades, speculative fund buying was estimated at 2,000 lots.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat experienced a quiet session taking on the role of a follower. "The market was a trailer of Chicago throughout," a KCBT broker said.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

Futures were supported by Monday's well behind average spring wheat planting progress. Spring wheat was the leader of U.S. wheat futures, with strength in the July contract illustrating demand for higher protein wheat. The cash basis for July wheat has strengthened, reflective of very little cash supply movement by farmers, a broker said.