DJ US Wheat Review: Ends Up Amid Talk About Frigid Weather

CHICAGO, Jan 14, 2009 (Dow Jones Commodities News via Comtex) --
By Tom Polansek
Of DOW JONES NEWSWIRES

U.S. wheat futures settled higher Wednesday in choppy trading amid worries about the potential for plant damage from a deep freeze in the U.S.

Chicago Board of Trade March wheat futures gained 3 1/2 cents to $5.74 1/4 per bushel. Kansas City Board of Trade March wheat edged up 3 cents to $6.00, and Minneapolis Grain Exchange March wheat added 4 3/4 cents to $6.41 3/4.

The markets seemed to find support from fears that subzero temperatures are threatening winter wheat that does not have adequate snow cover, traders said. Soft red winter wheat in portions of southern Illinois appears to be most at risk for damage from winterkill, which reduces yields, they said.

Still, it's difficult to get too bulled up about the weather because the crop doesn't grow during the winter, an analyst said. Farmers can't determine the full extent of winterkill damage until plants break dormancy in spring.

"In reality, you're not going to get the market to bite off on that until you get into April," an analyst said about winterkill fears.

Trading was thin and choppy for much of the day session, so it's hard to read too much into the activity, a CBOT floor trader said. Commodity funds bought an estimated 1,000 contracts.

CBOT March wheat traded in a range of $5.62 to $5.80 in open outcry trading. CBOT March wheat has support at its 40-day moving average around $5.57 1/2, an analyst said.

The firm close marked the second consecutive day of gains for wheat following sharp losses Monday. CBOT wheat closed near limit down Monday amid spillover pressure from limit-down corn and soybeans.

Kansas City Board of Trade

KCBT wheat ended higher after trading both sides with the other markets. March wheat traded in a range of $5.89 1/2 to $6.07 1/2.

U.S. wheat continues to be uncompetitive on the world export market because prices are too high, traders said. The U.S. has faced tough competition lately from countries the Black Sea region, such as Russia.

Egypt's state-owned General Authority for Supply Commodities, or GASC, said Wednesday it is tendering to buy 55,000-60,000 tons of wheat for shipment Feb. 6-20 on a free-on-board basis. Egypt on Tuesday bought 60,000 tons of Russian wheat in a tender.
Minneapolis Grain Exchange

MGE wheat ended higher as the markets continued to recover from Monday's slide, a trader said. There was a lack of fresh news concerning spring wheat, traded at the MGE, he said.

"If you got some export sales, it's bullish," an analyst said. "Routine business to Japan doesn't count."

Japan said Tuesday it was seeking 157,000 tons of wheat, including 90,000 tons from the U.S., in a tender to be concluded Thursday. The tender shouldn't impact the markets because it is routine, traders said.

March wheat traded in a range of $6.33 to $6.48. That was within Tuesday's range, which spanned from $6.24 1/2 to $6.54 1/4.

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

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