October 9, 2008

 

US Wheat Review on Wednesday: Ends modestly firmer on oversold ideas

 

 

U.S. wheat futures settled with modest gains Wednesday as the markets extended a technical rebound amid ideas recent sell-offs were overdone.

 

Chicago Board of Trade December wheat jumped 4 3/4 cents to US$6.08 per bushel. Kansas City Board of Trade December wheat inched up 4 cents to US$6.38, and Minneapolis Grain Exchange December wheat gained 8 1/4 cents to US$6.74 1/4.

 

The markets were due for a recovery after sliding Monday and last week, traders said. Short covering helped support wheat Tuesday, but prices settled below session highs.

 

"It's just a little bit of an oversold environment," a trader said. "The gains we had yesterday, we were unable to hold. The gains we had today were very modest gains."

 

Market participants continued to focus their attention on outside and financial markets after the Federal Reserve, European Central Bank and other major central banks announced coordinated cuts in target interest rates, an analyst said. Fundamentals will remain in the back seat until some calm returns to global financial markets, he said.

 

The U.S. Department of Agriculture's October supply/demand and production reports will be a major market mover only if they contain "something big and surprising," said Tom Leffler, owner of Leffler Commodities.

 

The reports are due at 8:30 a.m. EDT Friday.

 

"I think we're just trying to find some stabilization in the marketplace," Leffler said. "I don't think that report's going to amount to a hill of beans."

 

A rally in the CBOT soy complex helped lead wheat higher, a trader said. November soybeans climbed 38 cents in a bounce from oversold conditions amid support from firm cash prices.

 

 

Kansas City Board Of Trade

 

KCBT wheat futures closed higher in a rebound from overdone moves to the downside, a trader said. Volume was relatively light amid ongoing concerns about the health of the economy, he said.

 

Fundamentals are not the focus of the markets, a trader 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.

 

 

Minneapolis Grain Exchange

 

MGE wheat was oversold and due for a bounce, a floor trader said.

 

Wheat seems as though it is "definitely the laggard" in the grains, as CBOT corn and soybeans closed with double-digit gains, he said.

 

Rising forecasts for wheat production in the Northern Hemisphere continue to hang over the market, the trader said. Recent increases in forecasts for U.S., Canadian and Russian production are bearish influences, he said.

 

"Even if we kill off a few million bushels down in Australia, its not going to matter that much," the trader said. Australia has struggled with dryness in wheat areas.

 

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