US Wheat Review on Thursday: Climbs on technical buying, spillover

 

 

Technical buying and short-covering sparked a late rally in U.S. wheat futures Thursday, with the markets firming up as Chicago Board of Trade corn rose and soybeans trimmed losses.

 

CBOT September wheat jumped 14 1/4 cents to US$8.64 1/2 per bushel. Kansas City Board of Trade September wheat climbed 11 3/4 cents to US$8.98, and Minneapolis Grain Exchange September wheat rose 8 1/2 cents to US$9.54 1/2.

 

The markets were "technically performing extremely well" as prices climbed after CBOT wheat on Wednesday closed up the daily, exchange-imposed limit of 60 cents, said Dale Durchholz, analyst for Agrivisor. CBOT September wheat closed above key technical levels, including its 200-day moving average around US$8.59 3/4, a trader said.

 

Solid weekly export demand helped provide underlying support, analysts said. Weekly U.S. wheat export sales for the week ended Aug. 7 were 650,300 metric tonnes, within trade estimates of 400,000 to 750,000 tonnes.

 

"Export demand has been coming along at a pretty good clip here," Durchholz said.

 

Importing countries are restocking their supplies after emptying bins last marketing year, when poor weather slashed production around the world, analysts said. The U.S. could see demand from importers looking for high-quality wheat, as reports indicate countries like Ukraine and Germany are producing more feed-quality wheat than usual this year, a CBOT floor analyst said.

 

However, forecasts for record world production in 2008-09 continue to hang over the market. It's "baggage" for the market that the U.S. Department of Agriculture predicts global wheat stocks will expand to 136.2 million tonnes from 115.2 million tonnes in 2007-08, an analyst said.

 

Wheat is going to need spillover support from other markets to help it extend gains, Durchholz said. Traders will continue to watch movements in corn, soybeans and crude oil.

 

"If the others move, wheat isn't going to sit there and watch the world go by," he said. "It needs some help from elsewhere."

 

 

Kansas City Board of Trade

 

KCBT September wheat will likely establish a sideways trading range between US$8.50 and US$9 for the next week or so, after failing to close above US$9, said Kim Anderson, Oklahoma State University extension farm economist. The contract hit a session high of US$9.20 before pulling back.

 

"I'd be surprised if we get a rally tomorrow," Anderson said. "I don't see any new news coming on."

 

The market will wait Friday to see the results of a tender from Egypt's state-owned General Authority for Supply Commodities, or GASC. GASC said it's tendering to buy 55,000-60,000 metric tonnes of wheat on a cost and freight basis for shipment Sept. 16-30.

 

 

Minneapolis Grain Exchange

 

MGE wheat was a follower of CBOT wheat and corn, a floor trader said. There was some unwinding of long wheat/short corn spreads, mostly on the screen, he said.

 

Initial harvest results show protein levels for the U.S. hard red spring wheat crop have ranged from 13% to 17% so far, according to the North Dakota Wheat Commission. It's hard to determine an average because the crop was only 16% harvested as of Sunday, the commission said.

 

Lighter test weights have been reported in the western areas of the region, which were hit hardest by hot, dry weather. Commission officials expect test weights will improve as the harvest progresses in eastern areas, where weather conditions were more favorable.