December 27, 2008


US Wheat Review on Friday: Jumps to multi-week highs on technical buying



Light technical buying and spillover support from other markets pushed U.S. wheat futures to fresh six- and seven-week highs Friday.


Chicago Board of Trade March wheat ended up 17 cents at US$5.99 1/4 a bushel, up 36 cents on the week. Kansas City Board of Trade March wheat jumped 16 1/4 cents to US$6.16 1/4, up 33 1/4 cents on the week. Minneapolis Grain Exchange March wheat rose 11 1/4 cents to US$6.53, up 27 3/4 cents on the week.


CBOT March wheat in open outcry trading climbed to a session high of US$6.02, its highest price since Nov. 4, before trimming gains. The contract has rebounded and trended upward since dropping to a Dec. 5 low of US$4.71.


Volume was thin following the Christmas holiday Thursday. Activity should pick up next week, a CBOT trader said, although the exchanges are closed Thursday for New Year's Day.


"This whole week's been a situation of light trading volume that's allowed the upside to take place in this market," said Tom Leffler, owner of Leffler Commodities. "We haven't seen anyone willing to step in front of this market and sell it."


Commodity funds bought an estimated 2,000 contracts at the CBOT. It is supportive that speculative funds remain net short in CBOT wheat, a trader said. Wheat is due for a technical correction after its recent rally, Leffler said.


Weekly U.S. wheat export sales were disappointing, traders said. Sales for the week ended Dec. 18 were 253,600 tonnes, down 3% from the previous week and 12% from the prior four-week average, according to the U.S. Department of Agriculture. The sales were toward the low end of analysts' estimates, which ranged from 200,000 tonnes to 500,000 tonnes.


"You sure can't brag about export sales this morning," Leffler said.



Kansas City Board Of Trade


KCBT March wheat in open outcry trading reached a session high of US$6.20, its highest price since Nov. 13. The contract has rebounded since hitting a Dec. 5 low of US$5.01.


The next resistance area for KCBT March wheat is US$6.40, Leffler said. The next resistance area for KCBT July wheat, which represents the new crop, is US$6.58, he said. July wheat closed up 16 3/4 cents at US$6.27 1/4.


Gains in crude oil and in CBOT corn and soybeans helped support wheat, traders said. The markets seemed to be feeding off strength in each other, they said.



Minneapolis Grain Exchange


MGE March wheat touched a session high of US$6.59, its highest price since Nov. 17. The contract has gained more than US$1 this month after hitting a Dec. 5 low of US$5.50.


Friday's gains were technically led with a lack of fresh fundamental news, traders said. Of the total weekly U.S. wheat export business, sales of hard red spring wheat were 27,000 tonnes, according to the USDA.


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