July 17, 2008

 

US Wheat Review on Wednesday: Rallies on technical buying, short covering

 

 

U.S. wheat futures closed solidly higher Wednesday on technical buying and short covering, as the markets bounced after sliding for the past two day sessions.

 

Chicago Board of Trade September wheat jumped 23 cents to US$8.34 per bushel. Kansas City Board of Trade September wheat rose 16 1/2 cents to US$8.60 1/2, and Minneapolis Grain Exchange September wheat climbed 19 1/2 cents to US$8.94.

 

CBOT wheat led the rally, with nearby September shaking off early weakness after briefly sliding below US$8 for the first time since June 5. Bulls could make an argument that the market saw a "bullish reversal" established in the session, but it's difficult to see much upside potential for prices, said Chad Henderson, analyst for Prime Agricultural Consultants.

 

CBOT September wheat faces resistance at US$8.40, he said. The contract ended a hair below its 50-day moving average of US$8.34 1/4 after trading to a session high of US$8.38, traders said.

 

"Overall, most of the fundamentals are still pretty negative on the market," Henderson said.

 

The ongoing U.S. winter wheat harvest and expectations for a record global crop are bearish. Hard red winter wheat cutting is nearly complete in U.S. southern Plains states, such as Kansas and Oklahoma, and harvest is moving north in soft red winter wheat states.

 

"Yields are high," said Sid Love, analyst for Kropf & Love Consulting.

 

Some traders were buying wheat and selling corn, a CBOT floor trader said. CBOT corn and soybeans also ended firmer after bouncing from early losses.

 

Commodity funds bought an estimated 3,000 contracts.

 

 

Kansas City Board Of Trade

 

KCBT wheat futures followed CBOT wheat into positive territory. The market bounced back from early weakness, with spillover selling and harvest pressure seen weighing on prices at the start of trading.

 

Nebraska's wheat harvest is picking up speed. Wheat quality varies "immensely" but seems "fairly good" overall, the Nebraska Wheat Board said in a harvest report. Producers in southeastern and southern-central areas are wrapping up cutting, it said.


 

Minneapolis Grain Exchange

 

MGE wheat futures closed higher, as the market trailed advances in CBOT wheat, a floor trader said.

 

Weather outlooks look mostly favorable around the world, with producers expecting rain to relieve dryness in some spring wheat areas of the U.S. northern Plains, Love said.

 

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