December 20, 2007

 

US Wheat Review on Wednesday: Rallies; technical buying, position squaring

 

 

U.S. wheat futures ended sharply higher Wednesday, soaring back from Tuesday's setback on a combination of technically based speculative buying and end- of-year position squaring.

 

March CBOT wheat ended 21 1/2 cents higher at US$9.73 1/2, March KCBT wheat settled 23 3/4 cents higher at US$9.95, and March MGE wheat finished 26 3/4 cents higher at US$10.95 1/2.

 

The ability of the markets to hold technical support Tuesday set the stage for Wednesday's bounce, as bullish underlying fundamentals remain underpinning features to limit declines to only profit-taking setbacks, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

The bounce uncovered fresh buying, with traders impressed by the market's strength in the absence of fresh news to influence prices, traders said.

 

Meanwhile, lingering concerns over tight global supplies, news of Japan doubling its budget to import wheat in 2008 served as underlying supportive features, traders added.

 

The DTN Meteorlogix Weather forecast said the weather in the southern and central Plains is quiet, with snow cover protecting the winter wheat crop. The next couple days may see some light precipitation, mainly in the eastern areas. Chances for light to moderate precipitation increase on Friday into Saturday. Next week's outlook is more uncertain for the Plains, but some forecasts see a possible storm late in the week, Meteorlogix added.

 

On tap for Thursday, the U.S. Department of Agriculture is scheduled to release weekly export sales figures for the week ended Dec. 13 at 8:30 a.m. EST. Trade estimates put soybean export sales at 200,000 to 500,000 metric tonnes.

 

In CBOT pit trades, buyers and sellers were scattered among various commission houses, with speculative funds estimated buyers of 3,000 lots.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures ended up, spiking higher in pretty light volume trade, floor traders said. A lack of any significant selling opened the door to the bounce, with light fund buying seen as a driver of upside movement, they added.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended higher in quiet trade, with futures following the higher theme in Chicago, an MGE trader said.

 

"There was nothing fundamentally new that spurred the gains, but technical strength and position evening from prior gains buoyed upside movement, analysts said.

 

Inter-market spreading was featured, with traders selling Minneapolis wheat versus Chicago and Kansas City wheat, traders added.