US Wheat Review on Monday: Climbs on spillover support
U.S. wheat futures settled sharply higher Monday on support from rallies in neighboring and outside markets.
Chicago Board of Trade March wheat soared 38 3/4 cents to US$5.56 3/4 per bushel. Kansas City Board of Trade March wheat jumped 35 1/2 cents to US$5.84, and Minneapolis Grain Exchange March wheat rose 28 1/2 cents to US$6.20 1/2.
Strong gains in corn, soybeans, stocks and energies helped boost wheat, traders said. Equities climbed and sparked rallies in commodities after the federal government said it would bail out Citigroup Inc. (C), they said.
CBOT March wheat briefly surged the daily, exchange-imposed limit of 60 cents in early dealings before paring gains.
A slide in the U.S. dollar added to the bullish tonnee because it gives foreign countries more buying power to import U.S. commodities, traders said. There was some supportive market chatter that a break in prices last week would help attract some export demand to the U.S.
However, Monday's rally made U.S. wheat less competitive on the world market, a CBOT floor trader said. Wheat from the Black Sea region continues to be more competitively priced.
"We need lower prices to see a pick-up in demand," a grain analyst said.
The U.S. Department of Agriculture said weekly U.S. wheat export inspections were 22.304 million bushels, above trade expectations of 13 million to 18 million. The inspections "were positive for wheat," although the market is expected to continue following corn and soybeans, an analyst said.
Kansas City Board of Trade
KCBT wheat futures closed higher on strength from the rallying outside markets and the weaker dollar. Fundamental news took a back seat to the stock market, although traders continue to monitor export demand.
The USDA, in its weekly crop progress report, is expected to keep its good-to-excellent rating for winter wheat unchanged from last week or to lower it one percentage point, Citigroup said in a note. Last week, 66% of the crop was rated good to excellent. The report is due out at 4 p.m. EST.
In other news, heavy rain will likely hit about 15% of Australia's winter wheat belt late this week, T-Storm Weather said in an update to its daily forecast. Rains at harvest time have already delayed cutting in areas and raised concerns about quality losses.
Minneapolis Grain Exchange
The strong influence of rallying outside markets pulled MGE wheat higher, a trader said. The market was due for a recovery after MGE March wheat last week closed down 61 1/4 cents on the week.
The markets can make wild price moves on small orders due to low trading volume, traders said. Volume is thin as the end of the year approaches and ahead of the Thanksgiving holiday.