July 3, 2008

 

US Wheat Review on Wednesday: Rises on short-covering, CBOT corn rally

 

 

Short-covering and spillover support from Chicago Board of Trade corn futures kicked U.S. wheat futures mostly higher Wednesday.

 

Chicago Board of Trade September wheat rose 15 1/2 cents to US$8.80 1/4 per bushel. Kansas City Board of Trade September wheat jumped 10 1/2 cents to US$9.04 3/4, and Minneapolis Grain Exchange September wheat slipped 5 1/2 cents to US$9.35 1/2.

 

Traders were seen to be evening up positions ahead of the three-day July 4 weekend as a rally in corn lent wheat borrowed strength. The market extended its rebound from Tuesday after falling Monday and Friday.

 

"You whacked (wheat) pretty hard the last couple days, and you're coming into the holiday weekend," said Alan Brugler, president of Brugler Marketing & Management. "You're getting some guys go flat."

 

Gains in CBOT corn added to the bullish tonnee for wheat, as the grains are both used for animal feed. Heavy fund buying at the close of trading briefly drove corn up its daily, exchange-imposed limit of 30 cents. Commodity funds bought an estimated 2,000 wheat contracts at the CBOT.

 

"We've got way too much soft red winter wheat, and the basis is sloppy for both Kansas City and Chicago," Brugler said. "They're trying to get it fed, so if corn goes up, that gives you the ability to raise the (wheat) price."

 

The state-run Grain Board of Iraq issued a new tender to buy at least 50,000 metric tonnes of optional-origin wheat, although it was not seen to be a big factor in the markets as basis levels did not seem to firm up on the news, Brugler said. Traders said there is a lot of wheat to go around on the global market.

 

Trading is expected to be thin Thursday ahead of the long weekend. Position-evening should continue to be a feature, Brugler said.

 

"I expect about half the traders will be gone tomorrow," he said. "That doesn't necessarily equate to a quiet day."

 

 

Kansas City Board of Trade

 

KCBT wheat futures followed CBOT corn and wheat higher, a floor trader said. Technical buying boosted prices, although harvest pressure continues to hang over the market, he added.

 

Cutters should be able to get in the fields in most parts of the central and southern Plains during the holiday weekend after scattered showers on Thursday and Friday move out, meteorologists said. Hard red winter wheat areas will see a few hundredths of an inch to 3/4 inch of moisture, with some locally heavier totals, said Drew Lerner, president of World Weather Inc.

 

"Once we're done with this next two-to-three day period in the hard red winter wheat country, I don't think we're going to have much issue with rains for awhile," Lerner said. "I think the worst of the problems are over for the hard red wheat country."

 

 

Minneapolis Grain Exchange

 

MGE wheat futures bucked the trend in wheat and ended lower. There are few bullish concerns about spring wheat after recent rains gave the crop a boost, a floor trader said.

 

"The crop looks really good right now," the trader said. "They're getting the weather they need up in North Dakota."

 

Volume has not been very heavy this week ahead of the long weekend, traders said.

 

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