August 31, 2006

 

US Wheat Review on Wednesday: Sharply higher on fund, technical buying

 

 

US wheat futures surged higher Wednesday as a combination of fund and technical buying boosted prices with underlying concerns about tight global wheat supplies adding to the sharp gains, sources said.

 

India's confirmation that it would tender for wheat helped support the market as did news that Poland cut its wheat crop, said Vic Lespinasse of AG Edwards.

 

Worries about the quality of EU wheat because of recent rainy weather in Europe also added to concerns about tightening global wheat stocks, Lespinasse added.

 

"It's been well advertised, this support in wheat from the problems in Europe to the problems in Argentina and now the El Nino talk out of Australia. Europe's problems are now making us competitive with their prices," a grain analyst said.

 

"We had a bit of a traffic jam in the Dec wheat. We weren't able to get around the US$4.08 1/2 area for a while, but once we violated that, we were able to garner some technical buying," he added.

 

Technically, December wheat ended above its 100-day moving average and at its highest level since early August.

 

Late in the day the gains were extended as there was no selling interest in the pit, a commercial trader said.

 

CBOT September wheat jumped 17 cents to US$3.97 1/2, and December rallied 15 3/4 cents to US$4.16 1/2.

 

In CBOT trades, ABN Amro bought 1,500 December, Iowa Grain bought 1,000 September and JP Morgan bought 1,000 December.

 

Commodity fund buying was estimated at 5,200 contracts.

 

 

Kansas City Board of Trade

 

Short covering ahead of first notice day and ideas that Iraq was interested in wheat helped KCBT wheat futures end higher, sources said.

 

Although most traders don't expect India to buy U.S. wheat, the tender adds to concerns about tight world wheat stocks, a commission house broker said.

 

December wheat settled at its highest level since Aug. 9 but remained below its 100-day moving average.

 

KCBT September settled 9 1/2 cents higher at US$4.69 3/4 per bushel and December jumped 13 1/4 cents to US$4.86 3/4.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures finished higher on light fund buying and spillover support from the strong gains registered at the CBOT, an MGE floor broker said.

 

MGE September wheat rose 2 3/4 cents to US$4.49 3/4 per bushel and December gained 7 cents to US$4.68 3/4.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the week ended Aug. 24 at 7:30 a.m. CDT.