Reuters
CBOT wheat jumps on China talk, weather worries
Tuesday May 4, 11:46 am ET
CHICAGO, May 4 (Reuters) - Wheat futures at the Chicago Board of Trade (News - Websites) soared early on Tuesday on talk China was buying wheat and on worries about hot and dry weather moving into the western U.S. Plains hard red winter wheat region, traders said.
"There is talk China bought 3.0 million tonnes of U.S., Australian or Canadian wheat, and we're following Kansas City off the weather," a veteran wheat trader said.
At 10:31 a.m. CDT (1531 GMT), CBOT wheat was up 3-1/2 to 12-1/4 cents per bushel, with May (WK4) up 12-1/4 at $3.99-1/2. July (WN4) was up 11-1/4 at $4.08-1/2.
Man Financial, Refco Inc., UBS Warburg (News - Websites) and local traders were the key buyers, pit sources said.
More moisture is needed in the western part of the Plains and in the Northern Plains to ensure a strong production year, and a quick turn this week to hot weather could harm some of the crop, they said.
An abrupt turn to hot and dry weather this week in the U.S. Great Plains hard red winter wheat region might harm a significant portion of the crop, a private forecaster said on Tuesday.
"The area is set to get blasted with some very hot weather, and this couldn't come at a worse time because the crop is heading out and needs moisture, not this kind of heat," said Meteorlogix forecaster Mike Palmerino.
Support also was coming from the 48 percent good to excellent rating for the U.S. winter wheat crop given by USDA late Monday in its weekly crop progress report. That was unchanged from the previous week when the market was expecting crop conditions to improve after recent rainfall in the drier areas of the Plains. In No. 1 wheat producer Kansas, the rating did improve to 40 percent good to excellent from the prior week's 39 percent.
Exports were quiet overnight but the dollar was soft ahead of Tuesday's Federal Reserve meeting on interest rate policy.
Wheat may be drawing some support from the strong number in Monday's USDA weekly export inspections report and on more signs that China is shipping its backlog of U.S. old-crop purchases.
Deliveries on CBOT May contract remained light at 562 lots and there was strong stopping with a Tenco customer taking 444 lots.
Technical support in the July contract was at $3.97-1/4 per bushel and resistance at $4.00-1/4 was broken, driving the contract to a session high of $4.13. The nine-day relative strength index for July stood at 63 prior to the open on Tuesday. Chartists view an RSI of 30 or less as an oversold market and 70 or more as an overbought market. |
