US Wheat Review on Monday: Ends at 3-week highs on technical buying

 

 

Technical buying and short-covering drove U.S. wheat futures to three-week highs Monday.

 

Chicago Board of Trade March wheat closed up 26 1/4 cents at US$5.50 3/4 per bushel. Kansas City Board of Trade March wheat rallied 24 1/2 cents to US$5.46, and Minneapolis Grain Exchange March wheat climbed 25 1/4 cents to US$5.56 3/4. It was the strongest close for each contract since Dec. 4.

 

CBOT March wheat attracted technical buying after it rose above US$5.30, said Jerry Gidel, analyst at North America Risk Management Services in Chicago. The market appeared to be due for a bounce, he said.

 

"The market was a little oversold and got the right trigger to get going," Gidel said.

 

There seemed to be short-covering by commodity trading funds and some unwinding of long corn/short wheat spreads at CBOT, an analyst said. Commodity funds bought an estimated 3,000 wheat contracts at the CBOT.

 

CBOT March wheat ended above technical resistance around US$5.48, an analyst said. Its next upside objective is at the 200-day moving average around US$5.70, he said.

 

However, Gidel said the market has limited potential to rally as traders wait for confirmation of chatter that index fund rebalancing will boost the grains at the start of the new year. Traders want to "actually see some of the whites of the eyes of these funds actually coming into the market," he said.

 

 

Kansas City Board of Trade

 

Prices rose even though snow that is blanketing U.S. hard red winter wheat areas is seen as bearish for KCBT wheat because it protects the crop from potential cold damage, analysts said. The KCBT trades HRW wheat, which is used to make bread.

 

 

Minneapolis Grain Exchange

 

Technical buying and money flows drove prices higher as supportive fundamental news was scarce, a trader said. Weekly U.S. wheat export inspections of 10.7 million bushels were seen as unimpressive.