US Wheat Review on Wednesday: Ends higher on short-covering, egypt buy

 

 

Short-covering and optimism about export demand pushed U.S. wheat futures higher Wednesday, although the markets traded within Tuesday's range.

 

Chicago Board of Trade December wheat jumped eight cents, to US$5.06 3/4 a bushel. Kansas City Board of Trade December wheat ended up 6 1/2 cents, at US$5.27, and Minneapolis Grain Exchange December wheat finished 6 1/4 cents higher, at US$5.55 1/4.

 

The markets were able to hold their ground after pulling back from a short-covering rally Tuesday. Commodity funds bought an estimated 3,000 contracts.

 

CBOT December wheat traded an inside day, within Tuesday's open outcry range of US$5.16 to US$4.95. The contract's range Wednesday was tighter, at US$5.07 1/2 to US$5.01.

 

It was encouraging to see Egypt secure 60,000 tonnes of U.S. soft red winter wheat in a tender, traders said. That was the second consecutive tender in which Egypt has booked U.S. wheat.

 

Wheat may be "forming a demand base," said John Kleist, broker and analyst at Allendale. Traders will keep an eye on the U.S. Department of Agriculture's weekly export sales report, due out at 8:30 a.m. EDT Thursday, for signs of solid demand, he said. Analysts expect wheat export sales to be 300,000 tonnes to 500,000 tonnes.

 

 

Kansas City Board of Trade

 

Traders are worried the U.S. could price itself out of the global export market if prices continue to rise. There is heavy competition for export business because world wheat supplies are plentiful.

 

"The purpose of the market is to keep itself into consumption and going much higher is not going to accomplish that," Kleist said. "If we have a couple technical rallies here, we're going to shoot ourselves in the foot."

 

The markets would do well to move sideways to keep prices from getting ahead of demand, Kleist said. KCBT December wheat traded in an open outcry range of US$5.21 to US$5.29, within Tuesday's range of US$5.18 to US$5.39.

 

 

Minneapolis Grain Exchange

 

MGE December wheat traded an inside day of US$5.47 3/4 to US$5.57. Tuesday's range was US$5.45 to US$5.66.

 

Many spring wheat areas in North Dakota are nearing the start of harvest, but producers and custom harvesters' continue to find many fields that are still slightly higher than the ideal harvest moisture, the North Dakota Wheat Commission said in a report. Forecasts for warm temperatures and clear days, with little chance of moisture, should allow cutting to accelerate across the region this week, especially into parts of southern North Dakota, the commission said.