US Wheat Review on Monday: Ends mostly firmer but off session highs
U.S. wheat futures finished mostly higher Monday in technical-driven trade but trimmed gains before the close.
Chicago Board of Trade March wheat rose 7 cents to US$5.20 a bushel. Kansas City Board of Trade March wheat jumped 4 3/4 cents to US$5.43, and Minneapolis Grain Exchange March wheat slipped 1 cent to US$5.89.
Short-covering was seen as supportive, as speculative funds remain net short in CBOT wheat, traders said.
"Today's wheat action is kind of a reaction to where traders are positioned, not so much what's happening with world wheat production or world demand," said Dave Marshall, an independent marketing advisor and commodities broker.
Weakness in the U.S. dollar was a bullish influence because it gives foreign countries more buying power to import U.S. grains, traders said. Wheat pared gains as CBOT corn pulled back from its highs and as soybeans and crude oil stumbled into negative territory, an analyst said. CBOT March wheat closed 2 cents above its open-outcry session low of US$US$5.18.
"The fact that we opened on the highs and closed a whole lot closer to the lows suggests that we saw some people banking profits," he said.
CBOT March wheat faces resistance around US$5.60 to US$5.80, Marshall said. It will be difficult to rally much above that price level in the short term "without further information that would suggest that either demand is better or supply is worse," he said.
The technical trend probably remains sideways to lower, Marshall said. It would not be surprising to see wheat stumble this week after CBOT March wheat last week ended up 37 1/2 cents on the week, he said.
Kansas City Board of Trade
There was some supportive chatter about damage to hard red winter wheat in the U.S. Plains from cold weather, traders said. The weather was a factor in the markets early in the session, but concerns moved to the back burner by the end of the day, they said
Snowfall, which can protect wheat from cold weather, was light and wind-driven in the Plains this weekend, leaving some crops "fully exposed to bitter cold temperatures" Monday morning, World Weather Inc. said in a report. Crops are thought to have been "favorably established and are probably tough enough to fend off some of the damage, but no good guess on the damage potential can be made until spring greening takes place," the private weather firm said.
Weakness in crude oil pressured the grains late in the session, a KCBT floor trader said. Traders expect volume to remain on the light side heading into the holidays.
KCBT March wheat closed 1 cent above its open-outcry session low of US$5.42.
Minneapolis Grain Exchange
Volume was thin at the MGE. Traders are looking ahead to the end of open-outcry futures trading on Friday.
MGE hard red spring wheat futures will only trade electronically after Friday due to a migration of volume to the screen from the pit. HRS wheat is prized for its high-protein content and used to make bread.
"There's not really much trade going on here at all," a MGE floor trader said.
MGE March wheat ended 1 cent above its open-outcry session low of US$5.88.