US Wheat Review on Tuesday: Rises in technical bounce but ends off highs

 

 

U.S. wheat futures jumped Tuesday in a technical bounce from recent losses but trimmed gains before the close.

 

Chicago Board of Trade December wheat rose 8 cents to US$6.03 1/4 a bushel. Kansas City Board of Trade December wheat gained 5 3/4 cents to US$6.34, and Minneapolis Grain Exchange December wheat edged up 1 1/4 cents to US$6.66.

 

Wheat was due for a recovery after the markets tumbled Monday and last week, an analyst said. CBOT December wheat on Monday touched the lowest price for a nearby contract on a monthly continuation chart since July 2007.

 

"I think the grain market in general has been hit pretty hard," said Jim Bower, owner of Bower Trading. "I just think it's a corrective bounce."

 

Egypt's GASC bought 55,000 tonnes of U.S. soft red wheat and 55,000 tonnes of Russian wheat in a tender. It was "good to see (GASC) come back" to the U.S. after Egypt bought from the Black Sea region in recent tenders, Bower said.

 

Commodity funds bought an estimated 2,000 contracts at the CBOT. Weakness in CBOT corn weighed on wheat late in the session, a trader said.

 

Wheat will continue to take direction from neighboring and outside markets amid jitters about the health of the economy, an analyst said. U.S. stocks slid Tuesday afternoon as the drumbeat of worries on bank capitalization continued.

 

The U.S. Department of Agriculture will provide the markets with fresh fundamental data in its October supply/demand and production reports, due at 8:30 a.m. EDT on Friday.

 

Traders will probably "look at (the reports) for a couple hours and that's it, Bower said.

 

 

Kansas City Board of Trade

 

KCBT wheat rose in a technical rebound from Monday's sell-off, a trader said. The market saw a "Turnaround Tuesday" scenario but pared gains late, he said.

 

U.S. winter wheat planting was 59% complete as of Sunday, exceeding the 54% reported last year and just below the five-year average of 60%, the USDA said. Recent moisture in the Plains will help improve conditions for germination and early growth of wheat, although rain has now moved from the Plains into the central Midwest, according to DTN Meteorlogix.

 

 

Minneapolis Grain Exchange

 

MGE December wheat closed slightly higher but ended 16 cents off its session high of US$6.82. The contract closed near its session low of US$6.62.

 

There should be some position-squaring this week ahead of the USDA's crop reports, Bower said.

 

The average of analysts' estimates for 2008-09 U.S. wheat carryout is 552 million bushels, down from the USDA's September estimate of 574 million, according to a Dow Jones Newswires survey of 13 analysts.