US Wheat Review on Wednesday: Settles higher on year-end positioning

 

 

End-of-the-year positioning boosted U.S. wheat futures Wednesday as industry members looked ahead to government crop reports due out next month.

 

Chicago Board of Trade March wheat closed up 3 3/4 cents at US$5.44 3/4 per bushel. Kansas City Board of Trade March wheat gained 2 1/2 cents to US$5.40 1/2, and Minneapolis Grain Exchange March wheat jumped 2 1/4 cent to US$5.51 1/4.

 

There was some buying amid expectations that index funds will be buyers early in 2010 as they rebalance their portfolios, said Dale Durchholz, analyst for AgriVisor. Traders are uncertain exactly how much the funds will buy, if they do put more money into the grains.

 

Commodity funds bought an estimated 1,000 contracts at the CBOT, a trader said. Non-commercial speculative funds hold a large net short position in CBOT wheat, which leaves the market vulnerable to some short-covering.

 

Trading was choppy and volume was thin ahead of the holiday weekend. The CBOT, KCBT and MGE will trade an abbreviated session Thursday and be closed Friday for New Year's Day.

 

"There isn't any fundamental game out here in the wheat, at least for the day today," Durchholz said.

 

Traders are starting to look ahead to U.S. Department of Agriculture crop data due out Jan. 12, including its first estimate on U.S. winter wheat acreage, he said. Producers are thought to have seeded less wheat than last year, largely due to a late soy harvest. Many producers in the Midwest and South plant soft red winter wheat, traded at the CBOT, after soy but can't plant wheat until the soy are harvested.

 

 

Kansas City Board of Trade

 

Prices rose despite ideas that hard red winter wheat, traded at the KCBT, is in good shape for the winter. The crop in the central and southern U.S. Plains is covered with a blanket of snow that protects it from cold, Durchholz said.

 

In other news, traders on Thursday will take a look at weekly export sales data from the USDA. Export sales of U.S. wheat are expected to be 200,000 to 550,000 tonnes.

 

 

Minneapolis Grain Exchange

 

Heavy snow in the Red River Valley of western Minnesota and the eastern Dakotas is raising some early questions about how much spring wheat will be planted, Durchholz said. The crop will be seeded in the spring and harvested in late summer.

 

Spring wheat growers struggled with excessive wetness when they planted their most recent crop. Production ended up being strong, although quality was down due to cooler weather during the summer growing period.