December 18, 2008


US Wheat Review on Wednesday: Maintains short-covering rally



U.S. wheat futures rallied into the close of Wednesday's trading session, driven by short covering and weakness in the U.S. dollar.


"Supplemental psychological support" was offered by winter wheat kill ideas, said John Kleist, a broker/analyst at Allendale.


Chicago Board of Trade March wheat futures jumped 13 1/2 cents to close at US$5.57 1/2 per bushel, just under the day's US$5.60 high. Kansas City Board of Trade March wheat added 13 1/4 cents at US$5.781/4, and Minneapolis Grain Exchange March wheat rose 6 3/4 cents to US$6.14.


Speculative funds bought an estimated 2,000 CBOT wheat contracts, according to midday estimates.


"This week's collapse of the dollar is good for wheat," said Arlan Suderman, Farm Futures market analyst. "Wheat also received a little support this morning from the recent surge of Arctic air into the winter wheat belt, with more on the way in a few days. Several export tenders are also pending that provide support on the demand side.


"However, much of the recent gains have been tied to speculative fund short covering, rather than building new long positions," Suderman added. "Traders are reluctant to build long positions ahead of the Christmas break amid the current economic uncertainty."



Kansas City Board Of Trade


Meteorologists continue to monitor hard red winter wheat field conditions.


"An intense cold snap remains probable to begin across the Dakotas and Central Plains on Saturday," said meteorologist Mike Tannura, president of T-Storm Weather.


Pointing to snow melt through Friday, Tannura said most wheat south of Nebraska will be snow-free. And, he added, forecast minimum temperatures below 0 degrees Fahrenheit "may induce winterkill for a small area of the Plains."


Winterkill forecasts led to plenty chatter on the floor, but was tempered by a certain degree of caution.


"Lots of lessons have been learned trying to buy winterkill rallies," one floor broker said.



Minneapolis Grain Exchange


The weak U.S. dollar supported prices for hard red spring wheat at the Minneapolis Grain Exchange, but rallies will be tempered by ample world supplies, said Ryan Kelbrants, a Benson Quinn Commodities analyst.


Look for light volume and choppy trade to continue into the holidays, he said.


Open outcry trading at the Minneapolis Grain Exchange will cease after Friday's trading session.


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