US Wheat Review on Monday: Rallies along with soybeans, corn

 

 

U.S. wheat futures rose Monday, supported mainly by spillover strength from a rally in soybeans and strength in corn, brokers and analysts said.

 

Chicago Board of Trade December wheat rose 12 1/4 cents to settle at US$5.29 1/2, Kansas City Board of Trade December rose 17 1/2 cents to US$5.64 1/2 and Minneapolis Grain Exchange wheat was up 22 3/4 cents at US$6.24 1/2 a bushel.

 

Bullish sentiment in the commodity sector improved somewhat as crude oil climbed into positive territory, gold futures appreciated and the Dow Jones industrial average traded north of unchanged.

 

"I think we're seeing a little bit of a relief rally," said Jack Scoville, analyst and vice president of Price Futures Group in Chicago.

 

"Everything's acting better today," he said.

 

While prices did climb on improved sentiment, the direction of wheat is still largely determined by corn, with no weather problems in the Plains and the hard red winter wheat crop off to a better-than-average start with ample moisture and favorable temperatures seen through early November, an analyst said.

 

"This market is still being driven by corn," said Sid Love, analyst with Kropf & Love Consulting in Overland Park, Kan.

 

Corn prices will eventually find a floor. "I just don't know if we've found it yet," he said.

 

The Kansas wheat crop was rated 80% good to excellent last week, up from 62% one year ago.

 

"So this afternoon's crop report will show a better-than-average crop. We've had plenty of rain and now it looks like Indian Summer's going to be coming along," said Love.

 

Favorable growing and planting conditions are in place through Nov. 7, as mostly warm and dry conditions will continue through the entire central U.S., DTN Meteorlogix said. "This trend will again favor harvest activity, fall field work and a completion of winter wheat planting," the weather service said.

 

Wheat export inspections totaled 21.891 million bushels, the U.S. Agriculture Department reported, in line with pre-report trade estimates and above last week's total. This may suggest the low prices are beginning to stir up export business, a trader said.

 

Recent weekly export sales totals, however, have been unimpressive considering the low prices and global competition remains fierce, analysts have said.

 

Funds bought an estimated 3,000 CBOT wheat contracts.

 

In other news, spring rains from late September to early October have given a major boost to Australia's New South Wales winter crops, significantly improving yield prospects, officials there said. Wheat production is expected to be around 6 million tonnes, up from just 1.8 million last year and also up from last month's forecast of 5.8 million tonnes.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT December wheat futures appreciated with the gains in Chicago, as the market's oversold condition and the improved sentiment in commodities generated buying interest, a trader said.

 

The main story for HRW wheat is that the 2008-09 crop is off to a solid start on the Plains and that improving weather conditions should allow the remainder of the crop to be planted.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures led the gain in the complex, with local buying interest and some mill buying supporting values, a floor trader said.

 

"We've seen some interest from the mills, and I guarantee you there hasn't been any farmer selling. But mostly we're just bouncing higher along with the other markets," he said.

 

MGE December wheat hit a one-week high of US$6.26 1/4 and came within 3/4 cent of closing an upside chart gap left from the lower open on Oct. 22.