US Wheat Review on Tuesday: End up; bounce on spread unwinding

 

 

U.S. wheat futures ended higher Tuesday, managing to climb in the face of outside market pressure on consolidative buying and the unwinding of spreads.

 

March CBOT wheat ended 3 1/2 cents higher at US$5.23, March KCBT wheat settled 1 cent higher at US$5.17 1/4, and March MGE wheat finished 4 3/4 cents higher at US$5.31 1/4.

 

In CBOT trades, speculative fund buying was estimated at 1,000 lots.

 

The unwinding of corn/wheat and soy/wheat intermarket spreads provided a boost to prices, enabling futures to withstand pressure from outside financial influences, weakness in corn and soy and bearish underlying fundamentals, said Brian Hoops, president of Midwest Market Solutions.

 

The spreads were the legs under the market, as there was no fundamental justification for the price gains amid bearish export demand and weather conditions for winter wheat crops, Hoops said.

 

Overall activity was subdued, with futures hovering in a light volume holiday trading range. A firmer U.S. dollar applied early pressure to prices, but once futures failed to challenge the low end of the week's trading range, light buying emerged to trigger a consolidative bounce.

 

Nevertheless, grain futures continue to shadow crude oil and the dollar index as year-end crude long liquidation and dollar short-covering leads to generally lower prices, said Tim Hannagan, analyst with PFG BEST in Chicago.

 

The U.S. Department of Agriculture reported 13.285 million bushels of U.S. wheat was inspected for export in the week ended Dec. 17. The figure came in near the low end of trader expectations that ranged from 12 million to 19 million bushels. Year-to-date inspections are running 28.3% below the pace of inspections at the same time last year.

 

CBOT markets will have a holiday-shortened trading week, with markets closing at 1 p.m. EST Thursday, and remaining closed Friday in observance of the Christmas Day holiday.

 

 

Kansa City Board of Trade

 

KCBT wheat ended modestly higher in slow, light volume trade. The market experienced the holiday doldrums, struggling to find direction until consolidative pricing emerged to underpin prices, analysts say. The consolidative buying allowed prices to bounce, with light new crop Kansas City/Chicago spreading featured in otherwise subdued trading.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures ended higher, consolidating on end of the year, quarter positioning heading into the holidays, a MGE wheat trader said.