US Wheat Review on Wednesday: Rallies late, ends higher on positioning

 

 

Chicago Board of Trade December wheat closed up 10 cents at US$4.57 1/2 per bushel. Kansas City Board of Trade December wheat rose 8 cents to US$4.76 1/2, and Minneapolis Grain Exchange December wheat settled 8 1/2 cents higher at US$4.91 3/4.

 

Weakness in the U.S. dollar and gains in crude oil, soybeans and corn lent some spillover support to wheat, traders said. A soft dollar is seen as supportive because it makes U.S. grains more attractive to foreign buyers.

 

Wheat traded lower for most of the day session after the U.S. Department of Agriculture raised its forecast for 2009-10 U.S. wheat production and pegged U.S. wheat stocks as of Sept. 1 above trade expectations. The data affirmed for traders - yet again - that world supplies are comfortable.

 

The USDA said quarterly wheat stocks were 2.215 billion bushels, up from 1.858 billion a year earlier. The government's estimate exceeded the average trade estimate of 2.131 billion.

 

Wheat futures have set contract lows repeatedly during the past 1 1/2 months amid pressure from large world supplies and unimpressive export demand for U.S. wheat. Before bouncing, CBOT December wheat on Tuesday hit a fresh contract low of US$4.39 1/2, below its previous contract low of US$4.41 1/4, which was set Tuesday.

 

There is technical support for CBOT December wheat from US$4.30-US$4.40, a CBOT trader said. Commodity funds bought an estimated 2,000 wheat contracts at the CBOT.

 

Kansas City Board Of Trade 

 

KCBT wheat closed up on month-end positioning and support from outside markets, a trader said. Prior to the rally, KCBT December wheat in electronic trading hit a fresh contract low of US$4.60, below the previous low of US$4.63, set Tuesday.

 

The market traded the USDA data in the morning before pushing higher late in the session, a trader said. The USDA trimmed its forecast for winter wheat production, but the overall increase in output showed there is still plenty of wheat around, an analyst said.

 

The USDA estimated U.S. all-wheat production at 2.22 billion bushels, compared with its August estimate of 2.184 billion. The estimate for winter wheat production came in at 1.523 billion bushels, compared with USDA's August estimate of 1.537 billion.

 

Minneapolis Grain Exchange 

 

MGE wheat was the first market to shake off its losses and traded higher while CBOT and KCBT wheat were paring losses. MGE December wheat hit a fresh contract low of US$4.77, below its previous low of US$4.79 1/2, set Sept. 11.