US Wheat Review on Wednesday: Bounces on short-covering after slide

 

 

U.S. wheat futures closed modestly higher Wednesday on short-covering, as the markets bounced back from heavy losses Tuesday.

 

Chicago Board of Trade December wheat rose 8 cents to US$7.74 3/4 per bushel. Kansas City Board of Trade December wheat jumped 7 3/4 cents to US$8.19, and Minneapolis Grain Exchange December wheat finished 4 1/4 cents higher at US$8.44 1/2.

 

The markets were due for a recovery, as the sell-off was "overdone," a CBOT trader said. CBOT December wheat sank to a nine-month low Tuesday amid pressure from tumbling crude oil futures and a stronger U.S. dollar.

 

A lack of strong pressure from outside markets allowed wheat to bounce Wednesday, a trader said. Light, sweet crude for October delivery settled 36 cents lower Wednesday after falling more than US$5 on Tuesday.

 

News that Egypt's state-owned General Authority for Supply Commodities bought a total of 292,500 metric tonnes of wheat, including 120,000 tonnes of U.S. soft red wheat, was supportive, a trader said. However, it was nothing to get too excited about because the U.S. soft red wheat crop is big this year, he said.

 

The U.S. is expected to produce 609 million bushels of soft red wheat in 2008-09, up from 358 million in 2007-08, according to the U.S. Department of Agriculture. Producers expanded plantings last year to take advantage of high prices and weather was mostly favorable for the crop.

 

"It's supportive because we've got wheat moving out of the U.S.," the trader said about the sale to Egypt. "But there's a lot of wheat to go around."

 

 

Kansas City Board Of Trade

 

KCBT wheat futures rose in a rebound from Tuesday's steep losses. The market was in an oversold condition, a trader said.

 

Aside from the Egyptian purchases, there was not much other fresh news out, traders said. Beneficial rains that fell across Australia during the weekend are "building hopes of crop improvement in their wheat crop," Allendale said in a note.

 

The heaviest rains down under totaled 0.30 to 1.25 inches, with locally heavier amounts, and fell through central and northern New South Wales, DTN Meteorlogix said. Another rain system moving into southern Queensland and northern New South Wales on Wednesday also was seen as favorable to vegetative to late jointing wheat, the private weather firm said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures were a follower of CBOT wheat during the day session. It was a little surprising that wheat was able to remain higher amid losses in the neighboring CBOT corn and soybean markets, a MGE floor trader said.

 

There was light buying earlier in the day session but volume was relatively thin overall, the trader said. The session was "pretty uneventful," he said.