spring wheat futures at the Minneapolis Grain Exchange closed sharply higher on Wednesday, following a limit-up rally in Chicago Board of Trade wheat, traders said.
"When Chicago jumped, we jumped," one Minneapolis trader said. Traders cited multiple fundamental and technical factors for the surge, including news of US wheat sales to Egypt and Iraq, and talk of further reductions to the Australian crop.
Bull spreading was also a feature in Chicago and Minneapolis, with nearby months gaining on deferreds as traders exited bear spreads. MGE December spring wheat settled up 15-1/2 cents, or 3.3 percent, at $4.85-1/2 per bushel after peaking at $4.90, a two-month high. Deferred months-ended up 2 to 15 cents. Volume was estimated by the exchange at 6,336 contracts, up from 2,706 on Tuesday.
Funds were net buyers of 700 contracts in Minneapolis, traders said. Funds snapped up 10,000 contracts in Chicago and 2,000 to 3,000 in Kansas City, traders said.
CBOT wheat led the way up, with December settling up 25-1/2 cents at $4.65 a bushel after rising the 30-cent daily trading limit.
The Chicago market got jolt after Egypt on Wednesday bought 115,000 tonnes of US soft red winter wheat at its latest tender, along with 60,000 tonnes of Canadian soft red wheat.
Also, the US Agriculture Department confirmed that Iraq bought an additional 100,000 tonnes of US hard red winter wheat. The news followed confirmation on Tuesday that Iraq bought 200,000 tonnes of US HRW wheat. The MGE December spring wheat contract settled above its 100-day moving average of $4.77-1/2, which is now a key level of support. The contract's relative strength index climbed to 68. Traders view an RSI of 70 or higher as one sign of an overbought market.
Private forecaster Meteorlogix said rain was needed in Australia to prevent further yield declines for wheat, while more rain was also needed in the US Plains winter wheat belt. Rainfall was noted on Wednesday in Argentina's wheat region, which would improve wheat prospects, Meteorlogix said.
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