US Wheat Review on Tuesday: Reaches 7-week highs on technical buying

 

 

Technical buying and short-covering pushed U.S. wheat futures to seven-week highs Tuesday despite a lack of spillover support and bullish news.

 

Chicago Board of Trade December wheat ended up 17 cents at US$5.11 1/4 a bushel. Kansas City Board of Trade December wheat finished 14 cents higher at US$5.25, and Minneapolis Grain Exchange December wheat closed up 11 3/4 cents at US$5.37 1/4.

 

CBOT December wheat in electronic trading hit a session high of US$5.14 1/2, its highest price since Aug. 25. The contract closed above US$5 for the first time since Aug. 27.

 

The market has room for "a healthy run" to the upside after CBOT December wheat took out last week's high of US$4.83, said Louise Gartner, analyst for Spectrum Commodities. Major resistance doesn't show up until July's "old double-bottom breakout" at US$5.32, she said in a market comment.

 

Monday's close above the 50-day moving average sent "friendly technical signals" to the market and helped support gains, a CBOT trader said. Short-covering added strength to the rally, as non-commercial speculative funds continue to hold a large net short position in CBOT wheat, he said.

 

"The market's above major moving averages," the trader said.

 

There was an absence of supportive fundamental news to assist the rally, analysts said. Commodity funds bought an estimated 6,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

KCBT December wheat in electronic trading hit a session high of US$5.27, its highest price since Aug. 28. The contract closed at its highest level since Aug. 26.

 

The market climbed on technical buying, even though neighboring CBOT corn and soy were weaker, traders said. The row crops have given wheat direction lately, but wheat's rally Tuesday lent some strength to corn and soy, they said.

 

The U.S. Department of Agriculture is slated to issue its weekly crop progress report at 4 p.m. EDT, including updated estimates on winter wheat plantings. Planting is thought to have been 67% complete as of Sunday, up from 53% complete a week earlier, according to Citigroup.

 

 

Minneapolis Grain Exchange

 

MGE wheat finished higher with the other markets. The December contract hit a session high of US$5.41 1/4, its highest price since Aug. 31.

 

Weekly U.S. wheat inspections of 17.845 million bushels were within trade expectations of 15 million to 20 million. The inspections and crop-progress data, normally issued on Mondays, were delayed a day by the Columbus Day holiday.