US Wheat Review on Wednesday: Minneapolis Grain Exchange jumps on tight stocks, slow seeding

 

 

U.S. wheat futures rose Wednesday on crop concerns and technical buying, with gains at the Minneapolis Grain Exchange leading the other markets higher.

 

Chicago Board of Trade July wheat closed up 7 1/4 cents at US$5.28 a bushel. Kansas City Board of Trade July wheat gained 6 1/4 cents to US$5.78 1/2, and MGE July wheat ended up 17 cents at US$6.39 1/2.

 

CBOT wheat felt spillover support from MGE wheat during the session, said Jerry Gidel, analyst for North American Risk Management Services.

 

The technical trend in the market continues to be sideways, a trader said.

 

Short covering helped boosted CBOT wheat as speculative funds continue to hold a large net short position in the market, a trader said. Commodity funds bought an estimated 3,000 contracts at the CBOT.

 

CBOT July wheat hit an open outcry session high of US$5.28 1/2, just above Tuesday's high of US$5.28. An extension of the gains above resistance around US$5.30 could inspire more short covering, an analyst said.

 

There was little fresh demand news for the markets. Weekly U.S. wheat export sales due at 8:30 a.m. EDT Thursday are expected to be 250,000 tonnes to 450,000 tonnes.

 

 

Kansas City Board of Trade

 

There is lingering uncertainty about damage to hard red winter wheat from an early April freeze in the central and southern U.S. Plains, traders said. Widespread warmth is expected in the region from Thursday to Saturday, which "should not be problematic" for the crop following recent precipitation, according to T-Storm Weather.

 

"At this point we have plenty of moisture the western third of Kansas that was dry," Gidel said.

 

Temperatures should cool down Sunday to Tuesday, helping encourage thunderstorms and heavy rain in eastern areas, the private weather firm said. "Excessive" precipitation should only fall east of major wheat areas, it said.

 

 

Minneapolis Grain Exchange

 

MGE wheat rose on tight deliverable stocks of hard red spring wheat and delayed spring wheat planting, a market analyst said. Cool, wet weather has delayed planting in the northern U.S. Plains and traders do not expect much progress to be made this week.

 

Stocks of hard red spring wheat in deliverable position at Duluth/Superior dropped to 4 million bushels as of April 17 from 5.2 million a week earlier, according to data issued Tuesday by the MGE. A year ago, stocks were 12.8 million.

 

"You've got not very much wheat to deliver," the market analyst said. "Those who are long the May [MGE futures contract] are betting that no one's going to be there to deliver the wheat."

 

Traders are looking forward to Friday's Statistics Canada acreage report. Citigroup estimates total 2009 Canadian planted wheat area will be down 4.5% from 2008 to 9.7 million hectares.