US Wheat Review on Thursday: Closes higher on short-covering, demand

 

 

U.S. wheat futures closed near session highs Thursday on short-covering and supportive export news after shaking off early weakness, traders and analysts said.

 

Chicago Board of Trade December wheat jumped 13 cents to US$4.73 a bushel. Kansas City Board of Trade December wheat climbed 14 1/4 cents to US$4.83 3/4, and Minneapolis Grain Exchange December wheat jumped 10 3/4 cents to US$5.00 1/4.

 

The gains were a turnaround from early losses and came as traders covered previously sold positions, analysts said. Non-commercial speculative funds hold a large net short position in CBOT wheat.

 

A Moroccan tender for U.S. wheat helped support the rally, a market analyst said. Morocco's state wheat buyer said it is tendering to buy 320,000 tonnes of soft wheat and 280,000 tonnes of durum wheat.

 

Export demand for U.S. wheat has been lackluster so far this marketing year as buyers have not been in a rush to book supplies. There has been competition for export business, with plenty of wheat to go around globally.

 

It seems as though "all the old-crop bearish news is in the markets," said Dan Manternach, agriculture services director for Doane Advisory Services. Prices may remain in a choppy, sideways trading pattern until more is known about production in the Southern Hemisphere, an analyst said.

 

Commodity funds bought an estimated 4,000 wheat contracts at the CBOT.

 

 

Kansas City Board of Trade

 

KCBT wheat rose despite bearish signals from outside influences, traders said. The market was oversold and due for a bounce, they said.

 

Wheat has decoupled itself lately from the outside markets like crude oil and the U.S. dollar, a trader said. Crude oil and gold were lower, while the U.S. dollar was stronger. A firm dollar is generally seen as bearish for grains because it makes U.S. wheat less attractive to foreign buyers.

 

Total weekly U.S. wheat export sales of 495,900 tonnes were at the top of trade expectations of 300,000 to 500,000 tonnes. Net sales of 506,900 tonnes for delivery in 2009-10 were up 17% from last week but down 1% from the prior four-week average, according to the U.S. Department of Agriculture.

 

Sales of hard red winter wheat, traded at the KCBT, were 185,900 tonnes for delivery in 2009-10, while sales of hard red spring wheat, traded at the MGE, were 152,400 tonnes. Sales of soft red winter wheat, traded at the CBOT, were 51,600 tonnes.

 

 

Minneapolis Grain Exchange

 

MGE wheat closed higher with the other markets, although harvest continued to advance in the northern U.S. Plains. Weather should be mostly clear for cutting through the weekend, a trader said.