April 3, 2004



US Wheat Review On Friday: Higher; Joins Corn, Soybean Rally


U.S. wheat futures finished Friday by posting solid gains for both the session and the week, as continued fund buying remained the trend in the key agricultural markets.


Wheat rallied going into the close with the help of peer pressure from rallies in fellow corn and soybean markets. Most Chicago Board of Trade corn months set new 7 1/2-year highs late Friday.


CBOT corn, soybeans and wheat all rose Friday despite solid gains in the U.S. dollar versus other major world currencies.


"Funds are just not willing to give it up," said one CBOT wheat trader. "It's not about what the fundamentals are any more, it's about what the funds want to do."


Traders explained that with funds making money in the corn and soybean rallies, that they are also willing to make more of an investment in wheat.


CBOT May wheat ended up 5 3/4 cents on the day at $4.16 1/4, Kansas City Board of Trade May rallied 8c to finish up $4.24 1/4 and Minneapolis Grain Exchange May rose 4 1/4c to end at $4.45 1/2.


On the weekly charts, all major U.S. wheat months posted their highest closes seen so far this season. CBOT May finished up 11c on the week, while KCBT May rose 16 1/4c and MGE May gained 13 3/4c.


On Monday, the U.S. Department of Agriculture is expected to release the first national winter wheat condition ratings for the 2004 crop. Last year on March 31, the U.S. winter wheat crop was rated 51% good to excellent.


Over the weekend, hard red winter wheat areas in the southwestern half of Texas into southeastern Colorado could still pick up 1.00 to 3.00 inches of rain, but most of Nebraska, Kansas, Oklahoma and the northeastern half of the Texas panhandle will see little if any rain. There is a chance for some scattered showers Tuesday and Wednesday of next week.


Anecdotal reports of initial spring wheat seeding have been heard. Last year as of April 6, 5% of the U.S. spring wheat crop had been seeded.




Both CBOT May and Jly wheat discovered early support Friday at their lows posted Thursday at $4.06 1/2 and $4.13, respectively. Both contracts then uncovered resistance a 1/2c shy of Thursday's highs, which had been set at $4.19 and $4.25, respectively.


The contract high in the May sits above the market at $4.22 3/4 and at $4.26 3/4 in the Jly.


After losing over 18c to CBOT Jly corn in just the two previous sessions, CBOT Jly wheat gained back 2c in the spread Friday.


Funds were estimated to be buyers of 1,500 to 2,000 lots Friday.


Fimat bought 700 Jly and 300 May. Refco bought 400 May and 200 Jly. Cargill Investor Services purchased 400 May and ABN AMRO bought 300 Jly. Iowa Grain bought 600 May and sold 700 May.


Goldenberg Hehmeyer sold 1,000 Jly and 1,000 Dec, but was also a featured buyer in the corn. Rand Financial sold 400 May.


Man Financial spread 800 Jly/May.




KCBT wheat contracts jumped going into the close, with May running to $4.25, it highest point since running to a contract high of $4.31 back on March 23.


KCBT Jly rallied to $4.28 late, which was just 1c shy of the contract high of $4.29. KCBT Sep edged to a new contract high of $4.31 1/2.


Traders attributed the late pop on some last minute buying by Refco in the May, amid a lack of selling interest.


Refco ended the day a net buyer of about 400 May. Most other flat futures trade on the day consisted of 100 to 200 lots. Fimat spread 250 Jly/May.


In March, KCBT wheat futures volume totaled 253,158 contracts, which was just over double March 2003 wheat futures volume and a new record for the month of March.




MGE May wheat rallied late to set a new session high on the close of $4.46, which was also Thursday's high. For four sessions in a row, MGE May has topped out at $4.45 to $4.46. The contract high sits above the market at $4.53.


Total spring wheat futures volume for March totaled 104,732 contracts, breaking the previous March record of 90,340 lots.


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