US Wheat Review on Wednesday: Mostly up on technical buying, short-covering

 

 

Technical buying and short-covering lifted U.S. wheat futures mostly higher Wednesday as markets extended gains from Tuesday's rally, traders said.

 

Chicago Board of Trade December wheat ended up 3 cents at US$4.63 1/4 per bushel. Kansas City Board of Trade December wheat rose 4 3/4 cents to US$4.80 1/4, and Minneapolis Grain Exchange December wheat closed 1 cent lower at US$4.95 1/2.

 

CBOT and KCBT wheat finished in positive territory after slipping earlier in the day session. CBOT December wheat settled well above US$4.50 for the second consecutive day, which is helping the market gain some upward momentum, a trader said. Commodity funds bought an estimated 3,000 contracts at the CBOT.

 

Still, wheat has a way to go before breaking out of the range it has traded in for weeks, analysts said. Fundamentals remain weak, with global supplies seen as ample and export demand considered sluggish, they said.

 

"I think the overall theme is still bearish [for] the wheat market," said Terry Reilly, an analyst for Citigroup.

 

The U.S. Department of Agriculture is expected to increase its estimate for 2009-10 U.S. carryout in the October supply/demand report, due out at 8:30 a.m. EDT Friday. The average of analysts' pre-report estimates for carryout is 798 million bushels, up from the USDA's September estimate of 743 million, according to a Dow Jones Newswires survey of 14 analysts.

 

 

Kansas City Board Of Trade

 

KCBT wheat extended gains from Tuesday on short-covering and technical buying, traders said. Activity was "pretty quiet" on the floor, with the December contract trading within an 11 cent range, a trader said.

 

"Yesterday we had a nice rally, but we lost most of the momentum by the close and really didn't do anything technically but stay in the same trading range we've been in the past month," an analyst said.

 

There should be some positioning Thursday ahead of the USDA's supply/demand report, analysts said. Wheat will probably take direction from corn and soy shortly after the USDA releases its estimates, they said. It is also slated to issue a crop production report, which will be a main attraction for the corn and soy markets.

 

 

Minneapolis Grain Exchange

 

MGE finished weaker but off session lows, with the market seen as a reluctant follower, a trader said. The December contract pared losses after hitting a session low of US$4.89 1/2.

 

Traders will take a look at the USDA's weekly export sales report, due out at 8:30 a.m. EDT Thursday. Weekly U.S. wheat export sales for the week ended Oct. 1 are expected to be 400,000 to 600,000 tonnes, analysts said.