Wheat Market Recap Report for 12/12/2007 March Wheat finished up 30 at 940 1/2, equal to the high and 29 1/2 up from the low. July Wheat closed up 21 at 827. This was 21 up from the low and 3 off the high. Massive buying from investment funds helped drive the old crop wheat futures limit-up and new crop up 22 1/2 cents. A sharp recovery in crude and sharply higher equities helped to spark the aggressive buying. An agreement between the Fed and a consortium of four other central banks to continue supplying ample liquidity to world markets added to the bullish tone as the market is more and more convinced that the global economy will continue to expand. In wheat, this resulted in large-scale short covering by traders who have shown a strong tendency to try and pick a top in the wheat market in recent months. Weather and demand may be on the sidelines. Moisture in the southwestern US wheat belt over the past 24-36 hours may have alleviated a good deal of drought stress there, but market direction in wheat seems to be driven mainly by technical factors backed up by tight old crop supplies and on-going export demand. This may be best illustrated by the fact that nearby contracts in both KC and Chicago are leading deferred contracts all the way out into new crop. In other news Iran exported a total of 327,917 tons of wheat during the three months starting in September according to an Iranian newspaper. This is a big change from the last few decades when Iran was a chronic net importer. Wheat basis levels in the US interior are mostly steady with spot weakness. For the USDA weekly export sales report, released before the opening, traders are looking for wheat sales near 300,000-400,000 tonnes as compared with 367,400 tonnes last week. March Oats closed up 3 at 294 1/2. This was 4 1/2 up from the low and 1 1/2 off the high. |
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