US Wheat Review on Tuesday: Shakes off losses, ends mostly up on corn

 

 

Spillover strength from Chicago Board of Trade corn futures and fund buying pulled U.S. wheat futures mostly higher Tuesday, despite expanded estimates for domestic and world ending stocks.

 

CBOT December wheat closed up 3 cents at US$5.23 a bushel. Kansas City Board of Trade December wheat finished 3 3/4 cents firmer at US$5.25 1/2, and Minneapolis Grain Exchange December wheat ended down 1 1/2 cents to US$5.44 1/2.

 

Corn rose late in the session and dragged neighboring wheat higher as commodity funds bought the grains, traders said. The funds bought an estimated 3,000 wheat contracts at the CBOT.

 

Wheat's move higher followed weakness earlier in the session and extended gains from a strong rally Monday. As of Tuesday's close, CBOT December wheat was up 28 3/4 cents for the month.

 

Trading in wheat was thin and there were "a lot of air pockets," allowing prices to jump quickly, a trader said. CBOT December wheat recovered after hitting a session low of US$5.07 1/2.

 

Fundamental supply and demand factors did not support the rally, traders said. The U.S. Department of Agriculture confirmed in a monthly/supply demand report Tuesday that there is plenty of wheat to go around in the world.

 

"Wheat will continue to be influenced by fund flows, but fundamentals suggest selling hard rallies," MF Global said in a note.

 

The USDA estimated 2009-10 U.S. wheat carryout at 885 million bushels, above its October estimate of 864 million. World wheat carryout was pegged at 188.3 million tonnes, above the USDA's October estimate of 186.7 million tonnes.

 

 

Kansas City Board of Trade

 

KCBT wheat finished higher as it followed CBOT corn in late trading, traders said. Corn seemed to be the leader, and outside markets were not seen to be a major factor, they said.

 

The wheat markets seemed "tired" after recent gyrations, a trader said. Prior to Monday's rally, prices ran up to multi-week highs in October and then fell hard before the end of the month.

 

Demand for U.S. wheat continues to look weak, which is not friendly for bulls, analysts said. The USDA cut its export forecast by 25 million bushels from October to 875 million and raised its forecast for FSU-12 production.

 

 

Minneapolis Grain Exchange

 

MGE wheat finished slightly weaker but well off its session lows. MGE December wheat closed 13 cents above its session low of US$5.31 1/2.

 

The USDA modestly cut total production by 4 million bushels, to 2.216 billion bushels, because of harvesting problems of hard red spring wheat and durum wheat production. The USDA resurveyed producers about their spring wheat harvests because many had not yet cut their crops when the last survey was done for a Sept. 30 crop report. HRS wheat is used to make bread, and durum is used to make pasta.