Ag commodities soaring. No other commodities coming close to competing. This comment from futuresource sums it all up for the punters out there:
"If it's used as a food grade wheat, what kind of price do you put on people going hungry?" Henderson asked."
---------------------------------------------------------- US Wheat Review: Surges To New Highs; Ends Limit Up
By Tom Polansek Of DOW JONES NEWSWIRES
CHICAGO (Dow Jones)--U.S. wheat futures Tuesday soared to record highs as the Minneapolis Grain Exchange continued to lead a rally aimed at shutting off demand for spring wheat, analysts said.
Chicago Board of Trade March wheat closed limit up, 30 cents higher, at $10.03 per bushel. Kansas City Board of Trade March wheat ended up 30 cents at $10.50 1/4, and MGE March wheat closed up 30 cents at $14.63.
Spillover strength from gains at the MGE pulled CBOT and KCBT wheat futures limit up, traders said. MGE wheat futures are trying to climb high enough to turn off demand for spring wheat, traded at the exchange, analysts said.
Every CBOT wheat future from the nearby month through May 2009 closed limit up. CBOT May 2008 wheat settled a new high for the exchange of $10.19 3/4.
"Most of what's happening in Chicago and Kansas City is directly tied to what's happening in Minneapolis," said John Kleist, analyst for Kleist Ag Consulting.
Supplies of spring wheat are historically low and getting tighter, but commercial demand remains steady, analysts said. It is difficult to ration demand because high-protein spring wheat is used for food, said Chad Henderson, analyst for Prime Agricultural Consultants.
Japan announced overnight it was seeking 172,000 metric tons of wheat, including 81,000 tons of U.S. dark northern spring wheat of 45,000 tons of U.S. semi-hard wheat, in a tender to be concluded Thursday. The shipment is expected to arrive April 11 to June 10.
"If it's used as a food grade wheat, what kind of price do you put on people going hungry?" Henderson asked. "It's a demand for milling quality wheat not only here in the U.S. but also worldwide."
Statistics Canada also issued a bullish estimate for all-wheat ending stocks that was well below trade expectations. Statistics Canada sees pegged stocks as of Dec. 31 at 15.147 million tons, while analysts were expecting to see a number between 16 million and 16.9 million.
In other bullish news, Egypt's state-owned General Authority for Supply Commodities said it will tender Wednesday to buy at least 55,000 to 60,000 metric tons of wheat for shipment in March, on a free-on-board basis. GASC often buys on price breaks so it was unusual to see a tender after a limit-up close, a CBOT trader said. The markets should be higher Wednesday regardless of the tender results, following continued strength at the MGE, he said.
Sellers are reluctant to step out from the sidelines amid bullish mentality in the markets, traders said. Commodity funds bought an estimated 2,000 contracts at the CBOT.
Kansas City Board of Trade
KCBT March wheat closed limit up and was synthetically trading 20 to 25 cents higher at the close, a floor trader said. The market was "just following along" with the rally at the MGE and the storyline about solid demand for spring wheat, he said. The Statistics Canada report was bullish for the markets and for MGE spring wheat futures, in particular, the trader said.
Southwestern Plains winter wheat areas, already "bereft of significant moisture" during the winter season, have more stressful conditions ahead due to the storm system crossing the central Plains and Midwest, DTN Meteorlogix said. In the southwestern Plains, strong, dry winds will further stress winter wheat areas from southwestern Kansas through the Oklahoma and Texas Panhandle, the private weather firm said.
One quarter of Kansas' hard red winter wheat is in very poor to poor condition, up from 7% last year, the Kansas National Agricultural Statistics Service office said in a crop report. At the end of January, 33% of the crop was considered fair and 42% was seen as good to excellent, the report said. In January 2007, 31% was fair and 62% was good to excellent.
Minneapolis Grain Exchange
MGE wheat futures were the leader again Tuesday, with the nearby March contract nearing the landmark price of $15. The contract has synthetically already traded well above that level. MGE March wheat was synthetically trading around $16.40 at the close, a floor trader said.
There is a "near-term squeeze on cash and futures" at the MGE, Kleist said.
"You've got the shorts in there pretty well having a tough go of it," he said. "As far as the cash, that's being held in some really strong hands. If you can't get your hand on the cash and you're short the futures, you've got some big problems."
The MGE will raise its daily trading limit for spring wheat futures following a flood of sessions in which prices shot to the exchange-imposed limits, a spokeswoman said Tuesday. The daily trading limit will increase to 40 cents from 30 cents starting with the overnight electronic session that begins on Feb. 11, spokeswoman Nancy Krull said.
