US Wheat Review on Thursday: Climbs on crude oil rally, weak dollar

 

 

U.S. wheat futures climbed to an eight-week high Thursday, lifted by a rally in crude oil and drop in the dollar that were seen as supportive to a broad range of commodities.

 

Chicago Board of Trade December wheat finished up 22 3/4 cents at US$9.22 1/4 per bushel, its highest close since June 27. Kansas City Board of Trade December wheat settled 23 1/2 cents higher at US$9.50 3/4, and Minneapolis Grain Exchange December wheat climbed 27 1/4 cents to US$9.82 1/4.

 

CBOT December wheat briefly surged the daily, exchange-imposed limit of 60 cents before trimming gains. The contract ended well off its session high of US$9.59 1/2 but above key technical points, including the 200-day moving average.

 

Commodities were back in favor with speculators, who emerged as buyers in grains, energy and metals. Commodity funds bought an estimated 4,000 wheat contracts at the CBOT.

 

Export demand for wheat continues to look solid, with a good amount of business being done in the world, analysts said. Weekly U.S. wheat export sales for 2008-09 were a marketing year high of 916,500 tonnes, within trade estimates of 700,000 tonnes to 1.15 million tonnes.

 

U.S. export sales of 522 million bushels are running 10% above the five-year average, research marketing firm Allendale said in a note to clients. Export shipments of wheat are running 25% above year-earlier levels and 37% above the five-year average, the firm said.

 

On Friday, the grains will keep an eye on crude oil and the dollar, analysts said. Wheat should also continue to be influenced by CBOT corn, which will take about 30% of its direction from outside markets and 70% of its direction from weather, said Mike Zuzolo, analyst from Risk Management Commodities.

 

 

Kansas City Board of Trade

 

KCBT wheat futures felt strength from the rally in outside markets and the dip in the U.S. dollar. Gains in CBOT corn and soybeans added support, a floor trader said.

 

Traders are keeping an eye on dryness in the Southern Hemisphere, as wheat regions in Australia and Argentina could use water. Drought has slashed Australia's production for the past two years.

 

Major wheat areas Down Under should see scattered rains in the near term, mostly over the eastern sector of the continent, according to DTN Meteorlogix. There will be some rain through crop areas of Victoria and New South Wales Thursday into Friday, the private weather firm said.

 

Colder weather will follow the scattered precipitation, keeping growth rates slow throughout the eastern Australia wheat belt, Meteorlogix said. Western Australia is dry and in need of additional rainfall.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures were higher with the rest of the markets on strength in crude oil and the weaker dollar, a trader said. MGE was "absolutely" a follower of the energy markets and of activity in CBOT row crops, he said.

 

Although 2008-09 weekly exports were a marketing year high, they were "kind of lackluster" because much of the business was already known, the trader said. The USDA had previously announced 689,310 tonnes of HRW wheat sold to Iran.

 

"It was kind of disappointing if you take the Iran business out of there," the trader said about export sales.