US Wheat Review on Friday: Climbs on short-covering, outside support

 

 

Spillover support from other markets and position-squaring carried U.S. wheat futures sharply higher Friday after a week of volatile trading.

 

Chicago Board of Trade December wheat jumped 25 1/4 cents to close at US$7.18 a bushel, down 1 1/4 cents on the week. Kansas City Board of Trade December wheat rose 22 1/4 cents to US$7.56 1/2, down 3 cents on the week. Minneapolis Grain Exchange December wheat gained 21 cents to US$7.85, down 2 3/4 cents on the week.

 

Traders covered short positions, or bets that prices would fall, heading into the weekend and after losses earlier this week, an analyst said. Strength in crude oil and in financial markets supported the grains, he said.

 

Stocks rose after the U.S. government said it was working on a massive plan to take bad assets off the balance sheets of financial companies. Commodities were pressured earlier in the week by nervousness about the health of the financial sector.

 

"I think you're seeing (people) wondering if maybe the near-term spiraling economic news is going to abate itself for the near term, at least for next week," said Tim Hannagan, analyst for Alaron. "No news is actually good news now. It lends thought to the index funds that maybe we don't need to come in and continue to liquidate our massive long positions."

 

Fundamentals for wheat remain bearish, as the world is expected to produce a record crop in 2008-09 after farmers expanded plantings to cash in on high prices, Hannagan said. The U.S. Department of Agriculture last week raised its global production forecast to 676.3 million tonnes, up 5.5 million from its August estimate and up 65.4 million from 2007-08.

 

Weekly U.S. wheat export sales data, issued Thursday, were above expectations and showed demand was solid, particularly for higher protein wheat, traders said. However, "that's not enough to drive the market when you're awash with grain," Hannagan said.

 

 

Kansas City Board of Trade

 

KCBT wheat found support from gains in the stock market, crude oil and CBOT grains, a trader said. Despite the volatile trading this week, wheat ended nearly unchanged from a week ago.

 

Rains have created good planting conditions for hard red winter wheat in the U.S. Plains, Hannagan said. The USDA said winter wheat seeding was 11% complete as of Sunday and will issue an update on planting in its weekly crop progress report, due out at 4 p.m. EDT Monday.

 

"There really isn't anything bullish in the market," Hannagan said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures were a follower of the other markets. There was a lack of fresh fundamental news out, and wheat traders were focused on outside markets and the financial sector, a trader said.

 

The U.S. spring wheat harvest should wrap up this weekend, with the remaining crop ready to be cut in northern North Dakota, an analyst said. Harvest was 92% complete as of Sunday, according to the USDA.