US Wheat Review on Tuesday: Rises on short-covering in sideways trade
Late short-covering helped push U.S. wheat futures slightly higher Tuesday as the markets continued to trade mostly sideways.
Chicago Board of Trade March wheat gained 1/2 cent to US$5.28 1/2 a bushel. Kansas City Board of Trade March wheat rose 1 cent to US$5.55, and Minneapolis Grain Exchange March wheat ended up 3 1/2 cents at US$5.91 1/2.
Wheat chopped around near unchanged for much of the day session after falling hard Monday on spillover pressure from losses in crude oil and equities. Stabilizing outside markets helped keep the grain markets quiet Tuesday, traders said.
Wheat is "in a drift pattern" that should continue into the start of 2009, barring any unexpected fundamental developments, said Arlan Suderman, analyst for Farm Futures. Jitters about the economy have made speculative funds reluctant to build up positions in the market, he said.
"It's a time of uncertainty, and during times of uncertainty, you sit on the sidelines," Suderman said.
End users have no reason to chase the market as there is plenty of wheat to go around in the world, analysts said. Export business is being done on the global market, although other exporters continue to undercut U.S. prices, they said.
Egypt's state-owned wheat buyer the General Authority for Supply Commodities, or GASC, said it bought 240,000 metric tonnes of Russian and French wheat in a tender and none from the U.S. Traders said they hadn't expected the U.S. to sell wheat to Egypt.
It was encouraging that GASC bought a large amount in the tender, but it was disappointing the U.S. "missed the boat on price so much," Suderman said. The "take-home message was that there's still demand out there," he said.
Kansas City Board of Trade
Short-covering boosted KCBT wheat ahead of the close of trading, a floor trader said. Traders saw "more or less a very, very quiet day," she said.
"Outside markets weren't too horrible, so it didn't spill over," the trader said. "Basically, (wheat had) just small range today."
It was "kind of encouraging that we didn't have any further weakness after yesterday," the trader said. KCBT March wheat traded in a range of US$5.33 to US$5.44.
Tuesday's modest gains don't suggest there will be strong follow-through buying as market participants were trading "without any conviction," a KCBT trader said. The day's activity was "not convincing one way or the other," she said.
Minneapolis Grain Exchange
MGE wheat futures traded higher for much of the day session in quiet activity. March wheat hit a session high of US$5.61 1/2 before trimming gains.
Trading was choppy, as prices would "drift three or four cents at a crack," a MGE floor trader said. There was talk of Iraq buying wheat in a tender, including some from Canada, but none from the U.S., he said.