US Wheat Review on Friday: Bounces from losses but ends down on week

 

 

U.S. wheat futures finished stronger Friday in a bounce from losses Thursday that was supported by short covering and spreading, traders and analysts said.

 

Chicago Board of Trade March wheat ended up 9 1/2 cents at US$5.28 a bushel, down 9 1/2 cents on the week. Kansas City Board of Trade March wheat gained 9 1/4 cents to US$5.24 1/4, and Minneapolis Grain Exchange March wheat rose 6 cents to US$5.35 1/4.

 

There were ideas that wheat was technically oversold and due for a bounce after recent weakness, a CBOT trader said. Commodity funds bought an estimated 3,000 wheat contracts at the CBOT.

 

Traders unwinding short wheat/long corn spreads or putting on other spreads with wheat as the long leg likely added support, a trader said. Corn and wheat are linked because funds often trade in a basket of commodities and because both are used for animal feed. CBOT March corn finished up 3/4 cent.

 

Crop estimates from private analytical firm Informa Economics seemed to "lean a little bullish" as they pegged U.S. winter wheat plantings below most expectations at 39.4 million acres, an analyst said. A CBOT trader agreed the estimate was lower than expected.

 

 

Kansas City Board of Trade

 

Informa estimated hard red winter wheat acreage at 29.7 million acres, down 88,000 acres from its previous report and 1.85 million below last year. The estimate was lower than expected and somewhat support for KCBT wheat, a trader said.

 

Traders had expected little change in plantings because producers in the central and southern U.S. Plains, where HRW wheat is grown, often don't have many alternatives for seeding. HRW wheat could be losing acres to cottonne and sorghum, a trader said.

 

KCBT March wheat closed down 3 1/4 cents on the week. That was the smallest loss for the week of the three wheat markets.

 

 

Minneapolis Grain Exchange

 

MGE wheat rose with the other markets in a recovery from recent losses, a trader said. Technical charts continue to look weak following Thursday's sell-off, he said. He predicted "more downside ahead."

 

Overall, the supply and demand storyline for wheat is considered unsupportive because world ending stocks are comfortable and U.S. export sales are sluggish. The pace of U.S. sales has lagged due to strong competition from other exporters.

 

MGE March wheat finished down 7 1/4 cents on the week.