US Wheat Review on Wednesday: Rallies on weak dollar, spillover support

 

 

Fund buying and support from neighboring and outside markets pushed U.S. wheat futures sharply higher Wednesday.

 

Chicago Board of Trade December wheat closed up 25 cents at US$5.42 1/2 per bushel. Kansas City Board of Trade December wheat climbed 20 1/4 cents to US$5.46, and Minneapolis Grain Exchange December wheat soared 18 cents to US$5.53 1/4.

 

Wheat climbed with other commodities like corn, soy, crude oil and metals amid support from the falling U.S. dollar, analysts said. Commodity funds bought an estimated 5,000 wheat contracts at the CBOT.

 

"I'd have to just say we're trading the money flow," a grain analyst said. "I just can't find the fundamental support that would push prices to these levels."

 

CBOT wheat was vulnerable to short-covering as non-commercial speculative funds held a large net short position, a trader said. The market has been shaking out shorts lately as funds have trimmed their heavy short position.

 

CBOT December wheat could see follow-through technical buying after closing above its 100-day moving average around US$5.32 a bushel, an analyst said. The strong close "opens up the chart" for further gains, he said.

 

CBOT December wheat in electronic trading hit an 11-week high of US$5.48 1/2 a bushel. That topped the contract's recent high of US$5.29, set Oct. 14.

 

 

Kansas City Board of Trade

 

KCBT wheat rallied on the weak U.S. dollar and gains in other markets, traders said. Wheat looks as though it has the potential to run even higher if the dollar stays weak, a grain analyst said.

 

KCBT December wheat in electronic trading hit a session high of US$5.53 1/4, its highest price since Aug. 7. The rally took out the recent high of US$5.43, hit Oct. 14.

 

 

Minneapolis Grain Exchange

 

MGE December wheat hit a session high of US$5.60 1/2, its highest price since Aug. 25. The contract topped its recent high US$5.54 1/4, set Oct. 14.

 

Fundamentals remain weak as the world carryout is comfortable and demand has not been overly impressive, analysts said. There is stiff competition for export business due to large world supplies.

 

Traders are waiting to see weekly U.S. wheat export sales data issued by the U.S. Department of Agriculture at 8:30 a.m. EDT Thursday. Export sales for the week ended Oct. 15 are expected to be 400,000 tonnes to 600,000 tonnes.