November 16th US wheat daily review: dollar weakens, wheat rises sharply

On November 16th, three U.S. wheat futures markets closed sharply higher, the highest level since early August, mainly due to a weaker dollar and a flood of money into commodity markets.

The CBOT12 monthly contract rose 23. 25 cents to 562.25 cents a bushel.

The KCBT12 monthly contract rose 19. 75 cents to 560.25 cents a bushel.

The MGE12 monthly contract rose 18. 50 cents to 574.25 cents a bushel.

The wheat market closed near the intraday high as the dollar fell sharply to its lowest level since August 2008, analysts said. The CBOT12 monthly contract rose to $5.64 at one point in intraday trading, the highest level since Oct. 23.

The closing price of the CBOT12 monthly wheat contract was the lowest since Aug. 4. Analysts said the December contract closed above the 200-day moving average, which is good for the future peak. However, at present, the technical aspect of the wheat market has been seriously overbought.

Bullish sentiment in the wheat market was also boosted by the strength of international crude oil futures, a surge in precious metals and a surge in the corn and soybean markets in neighboring pools.

Commodity funds bought 5000 contracts in the CBOT soft red winter wheat market.

The CBOT December contract is up 68 cents so far this month as of the Nov. 16 close, analysts said.

As of November 9, non-commercial investment funds still held net short positions in the CBOT wheat market, making the market extremely vulnerable to short covering, according to the latest position report released by the Commodity Futures Trading Commission. The fund now holds 35144 net short positions, up from 33477 a week ago.

In the KCBT hard red winter wheat market, the market closed at its highest level since Aug. 5. The intraday high was $5.62, the highest level since Oct. 23.

The December contract for MGE spring wheat closed at its highest level since Aug. 12, with an intraday high of $5.75, the highest level since Oct. 23.

Wheat market prices have risen sharply recently, even though global wheat stocks are huge and demand for US wheat exports is depressed. The weekly export inspection data is within the expected range. According to the U.S. Department of Agriculture, U.S. wheat exports inspected 15.047 million bushels in the week ended Nov. 12.

Due to the huge global wheat supply, US wheat export sales have been under strong competitive pressure this year. The recent surge in wheat prices has significantly weakened the competitiveness of US wheat exports.