April 29, 2008

 

US Wheat Review on Monday: Climbs on technical bounce, strong corn

 

 

U.S. wheat futures strengthened Monday on a technical correction after Friday's sell-off, analysts and traders said.

 

Chicago Board of Trade July wheat rose 25 1/2 cents to US$8.41 per bushel. Kansas City Board of Trade July wheat rose 20 1/4 cents to US$8.71 3/4, and Minneapolis Grain Exchange wheat rose 23 cents to US$9.68.

 

Shawn McCambridge, an analyst with Prudential Bache, said he saw Monday's activity as a "technical correction of oversold idea."

 

Citing widespread expectations of a record wheat harvest moderating wheat prices, McCambridge added, "Without the fundamentals, there's not much upside potential."

 

The USDA's weekly crop progress report is due Monday at 4 p.m. EDT. Analysts and traders said they expect winter wheat conditions to score slightly better than a weak ago.

 

McCambridge also said he expected a predicted mid-week warm up to generate favorable crop response, holding prices lower as the winter wheat harvest nears.

 

A rally in CBOT corn added support to wheat, traders said.

 

 

Kansas City Board of Trade

 

Trading was slow on low volume in Kansas City, a trader said. There was some bullish talk about a possible freeze in the Plains Monday night, he said.

 

Cold weather in the Plains over the weekend did not cause any significant damage to wheat in the region, despite lows dipping into the low 20s Fahrenheit in some areas, according to Cropcast Agricultural Weather.

 

"Most of the wheat in these areas is either in vegetative growth or just beginning to joint, limiting the threat of any damage to the crop," Cropcast said. "A few more advanced or low-lying fields may have experienced some damage, but readings would have had to dip by an additional 3 to 5 (degrees) Fahrenheit in order to cause a concern for most areas."

 

 

Minneapolis Grain Exchange

 

Minneapolis wheat generally followed a rally in corn, according to a trader.

 

Option volatility picked up a little as well after the expiration of the May option contract Friday, the trader said. The May-July spread continued to narrow as the basis remained relatively unchanged, he said.

 

"It's nice to see convergence," a trader said. "It's a good indication that the market's working."