December 14, 2007
US Wheat Review on Thursday: Kansas city board of trade March tops US$10/bu, Minneapolis Grain Exchange December tops US$11
U.S. wheat futures close mixed Thursday after technical buying and bull spreading pushed Kansas City Board of Trade March wheat above US$10 per bushel for the first time and Minneapolis Grain Exchange December wheat above US$11.
Chicago Board of Trade March wheat rose 13 cents to US$9.53 1/2. Kansas City Board of Trade March wheat closed up 1 1/4 cents at US$9.83, and Minneapolis Grain Exchange March wheat ended up 12 1/2 cents at US$10.49 1/2.
CBOT March wheat briefly traded limit up, 30 cents higher, in a turnaround from early weakness. Profit-taking drove prices lower shortly after the opening but then liquidation appeared to be exhausted in CBOT December wheat, which is in delivery and expires Friday, an analyst said.
"When the Dec was done, sideline buyers came into the March," said Mike Zuzolo, analyst for Risk Management Commodities.
Thin volume and air pockets at all three exchanges allowed prices to surge sharply higher, traders said. Most of the buying was on the screen, they said.
Wetness in the Plains after a period of unfavorable fall dryness inspired bull spreading, traders said. While CBOT March wheat ended with double-digit gains, new-crop CBOT July wheat tumbled 21 cents to US$8.07 1/2.
"All of a sudden, they've decided to bull spread the heck out of it," one analyst said.
There are ongoing fears about tight world supplies, analysts said. Market chatter about deliverable stocks being loaded out of Toledo also was seen as a supportive factor for the second consecutive session.
It would be bullish if stocks were loaded out of Toledo because that would reduce deliverable supplies, a CBOT floor analyst said.
Weekly U.S. wheat export sales were at the high end of trade estimates and seen as "solid," a CBOT floor trader said. Total export sales for the week ended Dec. 6 were 516,800 metric tonnes, while trade estimates were 300,000 to 550,000 tonnes. Total commitments 27 weeks into the marketing year are 90% of the USDA's target for the marketing year.
Export sales for 2007-08 wheat were 513,800 tonnes, 33% over above the prior four-week average, the USDA says. New sales for the week were 764,200 tonnes, but cancellations and buybacks were 250,400 tonnes.
Kansas City Board of Trade
KCBT December wheat set a new all-time intraday high for a front-month contract of US$9.97, exceeding the previous high of US$9.79. KCBT March wheat cracked US$10 for the first time to reach a session high of US$10.03 before trimming gains a bit.
KCBT wheat futures followed CBOT wheat higher as the markets bounced from earlier losses, a floor trader said. Profit-taking weighed on prices early, he said.
"We just followed Chicago," the trader said.
Volatility remained high, and there did not appear to be any fresh fundamental news behind the turnaround, a trader said. Volume was thin.
"It moves and it moves fast and it doesn't take a lot of volume," the trader said about the market. "It just seemed like it was money chasing the front months."
A new round of precipitation will move across the southern Plains Friday, DTN Meteorlogix said. The moisture will not be as impressive as earlier in the week, but the system still has the potential to bring beneficial precipitation to some areas, the private weather firm said.
Total melted precipitation will range up to one-half inch. The past week has been a notable one for improving moisture supplies in the southern Plains wheat areas, Meteorlogix said.
Minneapolis Grain Exchange
MGE December wheat climbed to a new all-time high of US$11.15 per bushel, exceeding the previous high of US$10.85. That is the highest price ever for a U.S. wheat future at any exchange.
MGE March wheat set a new contract high of US$10.67, exceeding the previous high of US$10.37.
Trading was very choppy, floor traders said. MGE seemed to be following the CBOT, they said.
"It's just pretty wild," one MGE floor trader said. "There was a rally in Chicago and we just followed Chicago."
Air pockets in the market helped prices accelerate quickly, a trader said. There is very little volume in the December contract, he said.