US Wheat Review on Friday: Surge on funds, technical buying, crop worries

 

 

U.S. wheat futures surged Friday on technical and fund buying, with outside markets and crop concerns helping to fuel the rally.

 

Chicago Board of Trade July wheat closed up 19 cents at US$6.12 1/2 a bushel, up 35 cents on the week. Kansas City Board of Trade July wheat gained 13 1/2 cents to US$6.60 1/2, and Minneapolis Grain Exchange July wheat climbed 18 1/2 cents to US$7.45.

 

Nearby CBOT July wheat found technical support after it climbed above US$6.02, an analyst said. The contract in electronic trading hit a fresh high for the week of US$6.18, its highest price since Jan. 28.

 

There are ideas fresh money is coming into the markets. Commodity funds bought an estimated 4,000 contracts at the CBOT.

 

Weakness in the U.S. dollar helped support the rally, and gains in crude oil added strength, traders said. Crude oil is linked to the grains because funds often buy a basket of commodities and because ethanol is made from corn.

 

CBOT traders are watching the weather in U.S. soft red winter wheat areas amid worries that more rain in could threaten quality and yields, analysts said. The biggest threat appears to be a fungal disease known as head scab, or Fusarium head blight.

 

"Prospects would suggest we need to be very alert because of the extreme wet weather," an analyst said.

 

 

Kansas City Board of Trade

 

KCBT July wheat hit a session high of US$6.67 1/2, its highest price since Jan. 9. The contract closed up 30 cents on the week.

 

The falling dollar and firm outside markets helped support the market, a trader said. A weak dollar makes U.S. wheat more competitive for export business.

 

Harvest of hard red winter wheat is continuing to progress in the southern U.S. Plains. Early yields were not expected to be strong due to problems with drought and a freeze, an analyst said.

 

There are concerns about dryness in Argentina at planting time, he said. The Buenos Aires Cereals Exchange expects wheat area to total 3.7 million hectares, down 18.6% on the year.

 

 

Minneapolis Grain Exchange

 

MGE July wheat hit a session high of US$7.47, its highest price since Oct. 3, and closed near the high. The contract ended up 39 3/4 cents on the week.

 

There continue to be worries about excessive wetness in spring wheat areas of the northern U.S. Plains and about dryness in parts of Canada, an analyst said. Cool, wet weather has delayed spring wheat planting in North Dakota, raising concerns about yield losses and about the possibility that farmers will switch acres to other crops.