Australia ASX January wheat rises on positive US$, A$ lead

Taking a positive lead from a small gain in US wheat prices on Tuesday and a relatively weak local currency, Australia's most active wheat futures contract - ASX January - rose Wednesday, extending a base that appears to have been forming in recent weeks.

At 0520 GMT, ASX January wheat traded last at A$265 a tonne, up A$1.50 a tonne from Tuesday's settlement, on a spread of A$265-A$272. At the same time, the Australian dollar traded at US$0.66, near the lower end of its trading range this month.

Mark Martin, risk management adviser and director at commodity manager MarketAg, said that like many other agricultural commodity prices and the Australian dollar, ASX January wheat appears to be forming a base around current levels, steadying after sharp declines in recent months.

"We're certainly seeing sideways action maintained now for three to four weeks," he said by telephone from Willow Tree, a small town on the Liverpool Plains in northern New South Wales.

As for the future direction of wheat prices, given the size of the decline for ASX January wheat since late August and a host of other factors, "you'd have to say there's 10 percent to 20 percent risk to the downside and an 80 percent to 90 percent risk to the upside," he said.

ASX January wheat peaked late February at A$450/tonne - the culmination of an eight-month rally from around the A$225 area. More recently, it posted an intraday high of A$392/tonne August 21, then fell to an intraday low of A$258 late October.