US Wheat Review on Thursday: Bounce on support from outside markets, exports

 

 

U.S. wheat futures bounced Thursday, bolstered by spillover strength from neighboring grain and oilseeds, outside financial markets and supportive export sales.

 

September CBOT wheat ended 4 3/4 cents higher at US$5.16 1/4, September KCBT wheat settled 3 cents higher at US$5.49 1/2, and September MGE wheat finished 1 1/4 cent higher at US$5.99 1/2.

 

With outside market support very strong, it would have been very hard to hold wheat back Thursday, with a sale of U.S. wheat to Egypt supportive to prices as well, said Shawn McCambridge, senior grains analyst with Prudential Bache.

 

Speculative short covering was a featured attraction throughout the wheat complex, with advances accelerating as the early gains triggered pre-placed buy orders on the market's run to higher levels.

 

Thursday's rally was a function of what was happening all round the wheat market, with corn and soy rallies, weakness in the U.S. dollar and impressive gains in crude oil, equities and precious metals bullish features.

 

However, futures failed to generate follow-through buying after the initial gains were absorbed, a sign that traders had little confidence in any rally beyond Thursday's short covering bounce, said McCambridge.

 

The export sales were supportive but one week of solid sales and one cargo to Egypt doesn't alleviate the pressure of ample world supplies and U.S. prices trading at a premium to competitors in world markets, McCambridge said.

 

Otherwise, the uncertainty of late developing spring wheat crops remains a supportive feature, but strong yield reports from crop tour scouts offset lingering crop concerns, analysts added.

 

Overall, the market simply retraced Wednesday's setbacks, with some analysts saying wheat would have probably drifted lower without the support of corn, soys and outside markets.

 

In CBOT pit trades, speculative fund buying was estimated at 3,000 lots.

 

Meanwhile, spring wheat has strong yield potential provided the weather remains favorable until the crop is ready to be harvested, scouts on the Wheat Quality Council's Hard Spring & Durum Wheat Tour said Thursday. The tour calculated the average 2009 hard red spring wheat yield at 46.2 bushels per acre, up from the 2008 average of 37.7 bushels.

 

The average durum yield was estimated at 36.2 bushels/acre, above the 23.7 bushels predicted the previous year.

 

 

Kansa City Board of Trade

 

KCBT wheat futures settled higher, buoyed by broad-based buying amid supportive outside markets and fresh export demand.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures finished higher, in step with the rest of the U.S. wheat complex, but emerged as the weakest leg amid anticipation of strong yield potential from the Wheat Quality Council hard spring and durum wheat crop tour.