US Wheat Review on Friday: Rallies on short-covering, technicals

 

 

Technical buying and short-covering pulled U.S. wheat futures sharply higher Friday, with Chicago Board of Trade July wheat hitting a nearly four-week high.

 

CBOT July wheat surged 33 1/2 cents at US$5.70 per bushel, up 26 3/4 cents on the week. Kansas City Board of Trade July wheat soared 30 cents to US$6.14 3/4, Minneapolis Grain Exchange July wheat climbed 26 1/2 cents to US$6.84 3/4.

 

CBOT July wheat ended near its session high of US$5.74, its highest prices since April 6. The market exploded as CBOT July wheat climbed above its 50-day and 100-day moving averages, traders said.

 

Speculative funds, which are heavily short in CBOT wheat, came in to cover their short positions as prices rose, traders said. Buy stops were triggered along the way, they said.

 

It was "pretty impressive" that the market regained all its losses from Monday, when CBOT July wheat sank 23 3/4 cents on worries swine flu would reduce demand for animal feed, a CBOT floor analyst said. Fears about swine flu eased during the week.

 

Fresh fundamental news was lacking, but there was scattered supportive talk about developing dryness in Ukraine and eastern Europe, an analyst said. A major producer besides the U.S. will have to develop crop problems to sustain rallies in wheat, an analyst said.

 

 

Kansas City Board of Trade

 

KCBT wheat felt spillover support from the rally at the CBOT, traders said. KCBT July wheat climbed above its 100-day moving average near US$5.98 and ended up 21 1/4 cents on the week.

 

There was talk about excessive wetness and standing water in some Kansas wheat fields, which is supportive for prices and unfavorable for production, an analyst said. In most areas, though, recent rains have helped ease dryness in Kansas wheat and improve its condition, he said.

 

The Wheat Quality Council's annual U.S. hard red winter wheat tour kicks off Tuesday to survey fields across Kansas. The tour is expected to release a Kansas wheat production estimate and an average yield estimate around 4 p.m. EDT Thursday.

 

 

Minneapolis Grain Exchange

 

MGE wheat was mostly a follower of the other markets, a trader said. MGE July wheat ended up 33 3/4 cents on the week. Traders remain concerned about spring wheat planting delays in the northern U.S. Plains due to cool, wet weather.

 

Dry weather is expected in the region through at least Monday, which would be favorable for planting, although temperatures don't begin to warm up until Sunday, according to a forecast from T-Storm Weather. Eastern North Dakota and Minnesota have a chance of thunderstorms Tuesday through Wednesday, the private weather firm said.

 

If coverage is high enough, sluggish planting will continue, according to the forecast. If it does not rain, improved planting continues, it said.