US Wheat Review on Wednesday: Climbs on funds, technical buying, crop fears

 

 

U.S. wheat futures jumped Wednesday on fund buying, technical strength and crop worries, with Minneapolis Grain Exchange wheat leading the charge higher.

 

Chicago Board of Trade July wheat rose 13 3/4 cents to US$6.25 3/4 a bushel. Kansas City Board of Trade July wheat added 12 3/4 cents to US$6.75, and Minneapolis Grain Exchange July wheat climbed 25 cents to US$7.79 3/4.

 

CBOT July wheat settled above its 200-day moving average around US$6.21 and hit a session high of US$6.29, its highest price since Jan. 26. Commodity funds bought an estimated 4,000 contracts.

 

The rally represented a continuation of a recent trend in wheat that has been "led by the general push by funds into grain and oilseed commodities and evidenced by the continued rise in open interest," said John Kleist, broker and analyst at Allendale.

 

Lingering worries about a lack of rain in Argentina and in Eastern Europe were supportive, a trader said. The markets are also watching Australia for signs the weather is too dry, although favorable rains fell recently in some areas.

 

 

Kansas City Board of Trade

 

KCBT July wheat closed near its open outcry session high of US$6.78, which was its highest price since Jan. 6.

 

Worries about the declining condition of U.S. winter wheat were "supply-side friendly" for KCBT wheat, said Tim Hannagan, analyst for Alaron. The U.S. Department of Agriculture said 45% of U.S. winter wheat was in good-to-excellent condition as of Sunday, down from 48% last week.

 

Lowered condition ratings for Kansas and Nebraska were notable as the market shifts its focus from Oklahoma and Texas, where early harvest activities have begun, Hannagan said. Kansas saw its good-to-excellent rating fall to 47% from 54% last week, while Nebraska saw its good-to-excellent rating drop to 69% from 77% last week.

 

 

Minneapolis Grain Exchange

 

MGE July wheat hit a session high of US$7.81 1/2, its highest price since Sep. 30. The contract closed with a premium of US$1.54 over CBOT July wheat.

 

MGE wheat led the upside on continued worries about delayed U.S. spring wheat planting, traders said. North Dakota, the country's top spring wheat-producing state, had planted 69% of its crop as of Sunday, down from the average of 94%, according to the USDA.

 

"There are big question marks in Minnesota and North Dakota," Hannagan said.

 

Producers are expected to leave some land unplanted or shift acres to other crops, such as soybeans, from spring wheat due to the delays, analyst said. Cool, wet weather is responsible for the slow planting pace.