US Wheat Review: Ends Strong On Supportive Outside Markets

By Tom Polansek
Of DOW JONES NEWSWIRES

CHICAGO (Dow Jones)--Support from other markets and fund buying propelled U.S. wheat futures higher Monday ahead of the release of government crop reports.

Chicago Board of Trade December wheat closed up 22 3/4 cents at $5.20 a bushel. Kansas City Board of Trade December wheat climbed 20 3/4 cents to $5.21 3/4, and Minneapolis Grain Exchange December wheat rose 27 3/4 cents to $5.46.

Strength in neighboring CBOT corn and soybeans and in outside markets drove wheat prices higher, traders said. Gold and crude oil prices climbed, while the U.S. dollar sank.

Commodity funds were buyers across the grain and soy markets and bought an estimated 4,000 contracts of CBOT wheat, traders said. Nearby December corn finished 19 cents higher, while January soybeans climbed 17 cents.

Traders are waiting for the U.S. Department of Agriculture to release fresh crop production and supply/demand estimates at 8:30 a.m. EST Tuesday. There was positioning before the data come out, an analyst said.

Noncommercial speculative funds continue to hold a large short position in CBOT wheat futures and options, which leaves the market vulnerable to short-covering. They were net short 33,477 contracts as of Nov. 3, compared with 33,009 contracts a week earlier, according to a supplemental Commodity Futures Trading Commission report.

The supply/demand report is expected to reconfirm that world wheat supplies are comfortable, a trader said. The average of 16 analysts' estimates for 2009-10 U.S. wheat carryout is 869 million bushels, up slightly from the USDA's October estimate of 864 million, according to a Dow Jones Newswires survey.

Kansas City Board Of Trade

KCBT wheat felt strength from the weak dollar and from firm corn, soybeans, gold and crude oil prices, traders said. Wheat will likely take direction from other markets Tuesday, as the USDA reports aren't expected to change wheat's fundamental storyline, they said.

The USDA is due to issue its weekly crop progress report at 4 p.m. EST, including an update on winter wheat seeding. Planting is estimated at 85% complete, up from 79% a week ago, according to Citigroup.

Minneapolis Grain Exchange

Traders continue to keep an eye on demand, as higher prices make U.S. wheat less competitive for export business, an analyst said. Weekly U.S. wheat export inspections were 17.2 million bushels, slightly above trade expectations of 13 million to 17 million.

There is uncertainty about whether the USDA will tinker with its export projection in Tuesday's supply/demand report. Some analysts said the government could trim its current export forecast of 900 million bushels because of the sluggish pace of demand.

-By Tom Polansek, Dow Jones Newswires; 312-341-5780; tom.polansek@dowjones.com

(END) Dow Jones Newswires
11-09-09 1536ET
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