June 27, 2008

 

US Wheat Review on Thursday: Ends up on spillover, technical buys, demand

 

 

U.S. wheat futures climbed Thursday, extending recent gains on spillover support, technical buying and bullishness about demand.

 

Chicago Board of Trade September wheat soared 22 1/2 cents to US$9.42 3/4 per bushel. Kansas City Board of Trade September wheat jumped 17 3/4 cents to US$9.72 1/2, and Minneapolis Grain Exchange September wheat surged 27 cents to US$10.19 3/4.

 

Wheat felt spillover support from CBOT corn, which briefly climbed its exchange-imposed limit of 30 cents and tied its all-time for the nearby July contract. The grains are linked because both are used for feed.

 

A return to US$10 for CBOT September wheat could "definitely be back in the cards" after recent rallies, said Jason Britt, broker and analyst for Central State Commodities. Short-covering has helped pull wheat higher during the last few days, said Brian Hoops, president of Midwest Market Solutions.

 

Concerns about wet weather slowing the SRW wheat harvest and potentially damaging the crop were fundamentally bullish, Hoops said. Wheat diseases are a problem in Midwest states like Missouri, and more rain is expected in the area, Britt said.

 

Wheat trimmed gains before the close as profit-taking emerged. It seemed as though early buying had been exhausted by the close, Hoops said.

 

It wouldn't be surprising to see a setback Friday following this week's rallies, Hoops said. CBOT December wheat Thursday approached US$10 after hitting a weekly low of US$8.84 Monday, he noted.

 

 

Kansas City Board of Trade

 

Weakness in the U.S. dollar and strength in other markets helped propel KCBT wheat, a trader said. Crude oil soared Thursday, along with CBOT corn and soybeans.

 

There were some bullish demand ideas, as the U.S. Department of Agriculture announced that U.S. private exporters sold 280,000 metric tonnes of hard red winter wheat for delivery to unknown destinations in the 2008-09 marketing year, a trader said. Weekly U.S. wheat export sales of 503,400 tonnes were at the high end of trade expectations.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures rose following CBOT wheat and corn, traders said. MGE July wheat surged as much as 95 3/4 cents during the day session in thin trade before closing up 60 3/4 cents at US$11.90.

 

The nearby contract is trading without limits ahead of first notice day Monday. Open interest in MGE July was 894 contracts as of the close Wednesday.

 

"There's no more open interest, really," a MGE floor trader said about July. "There's just a lot of air bubbles in it."

 

Traders are waiting for the USDA to issue its June acreage and quarterly stocks report Monday, June 30, at 8:30 a.m. EDT.

 

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