US Wheat Review on Wednesday: Jumps with corn amid technical buying

 

 

Technical buying and spillover support from other markets helped lift U.S. wheat futures Wednesday as the markets continued their see-saw trading pattern.

 

Chicago Board of Trade May wheat finished up 8 cents, or 1.6%, at US$5.13 3/4 a bushel. Kansas City Board of Trade May wheat rose 6 1/2 cents, or 1.3%, to US$5.16. Minneapolis Grain Exchange May wheat gained 6 1/4 cents, or 1.2%, to US$5.25.

 

The markets recovered some losses from Tuesday, when CBOT May wheat fell 9 1/2 cents. Prices tumbled Tuesday after climbing Monday.

 

Traders are nervous about pressing the short side too hard because non-commercial speculative funds hold a massive net short position in CBOT wheat. That leaves the market vulnerable to sharp short-covering rallies.

 

Spillover buying from firm CBOT corn helped underpin wheat futures in "meager" volume, a CBOT floor trader said. Corn and wheat are linked because both are used for animal feed. Another trader said some participants were buying wheat and selling corn in spread trades in the pit.

 

Commodity fund buying of an estimated 4,000 contracts at CBOT lent support Wednesday. There could be fund selling of wheat heading into the end of the month, a trader said.

 

As of Wednesday's close, CBOT May wheat is up 25 1/2 cents for the month. The contract finished near its session high of US$5.16.

 

 

Kansas City Board of Trade

 

KCBT wheat finished stronger amid borrowed strength from corn and supportive signals from the weak U.S. dollar, a trader said. A soft dollar sometimes encourages bullish psychology about increased demand from foreign buyers, although U.S. wheat export sales have lagged throughout the marketing year.

 

The May contract partially recovered Tuesday's loss of 10 cents. It closed near its session high of US$5.19.

 

 

Minneapolis Grain Exchange

 

MGE wheat rose with the other markets. The May contract closed near its session high of US$5.26 1/2.

 

It would not be surprising to see prices backpedal Thursday, traders said. The fundamental storyline is weak due to ample U.S. supplies and tough competition for export business.

 

The U.S. Department of Agriculture is slated to issue its weekly export sales report at 8:30 a.m. EST Thursday. U.S. wheat export sales are expected to be 300,000 to 550,000 tonnes.