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Wheat Market Recap Report for 12/20/2005

March Wheat finished up 4 3/4 at 328, 1 off the high and 4 up from the low. May Wheat closed up 5 1/4 at 337 1/4. This was 3 1/4 up from the low and 1 off the high.

With strength in other grains, fund traders continued to cover short positions to support the rally into mid-session which pulled March wheat to the highest level since November 15th. Unlike most of the past few weeks, however, wheat futures led the market higher into the close. With speculators holding a near record net short position in last weeks Commitment-of-Traders report with options, the market is attracting increased buying when resistance levels are violated. In addition, wheat seems to be attracting new buying from index funds that are viewing wheat as a cheap commodity. Since the December 9th lows at 307 for March wheat, open interest is up near 5,000 contracts which indicates more than just short-covering is supporting the rally. News that a major consulting firm in Ukraine raised their estimate for 2006 wheat production to 12 million tonnes from 8-9 million previous due to better weather failed to pressure the market. Ukraine is a significant exporter this year with a crop of 20 million tonnes but a 12 million tonnes crop is likely to cut-off exports for next year. Near-term support for March wheat comes in at 325 and 320 1/2 with 329 1/4 and 336 as resistance.

March Oats closed down 4 3/4 at 189 3/4. This was 1/4 up from the low and 4 1/4 off the high.