January 1, 2008

 

US Wheat Review on Monday: Ends mixed amid year-end positioning

 

 

U.S. wheat futures wrapped up a blockbuster year during which prices rallied to new all-time highs by ending mixed Monday, with the nearby Chicago Board of Trade contract finishing flat.

 

Benchmark CBOT March wheat closed unchanged at US$8.85 per bushel, up from US$5.01 a year ago. Kansas City Board of Trade March wheat slipped 1/2 cent to US$9.13 1/2, and Minneapolis Grain Exchange March wheat jumped 6 1/4 cents to US$10.36 1/4.

 

CBOT March wheat was firmer for much of the day session on short covering after closing limit down, 30 cents lower, on Friday, traders said. There also may have been some traders who thought it was a good time to buy after the recent weakness, said John Kleist, analyst with Kleist Ag Consulting.

 

However, profit-taking late in the session weighed on CBOT wheat, floor traders said. Traders wanted to book profits going into the end of the year, they said.

 

In CBOT pit trades, UBS bought 400 July, MF Global bought 300 May and JP Morgan bought 200 May. Fimat bought 300 May and 200 March and sold 200 March.

 

Non-commercial speculative funds increased long CBOT wheat futures and options positions by 1,138 lots in the week ended Dec. 24 and trimmed shorts by 200 lots, the Commodity Futures Trading Commission said in a weekly supplemental report. The funds were net short 13,646 contracts.

 

There was not too much fresh fundamental news to move the wheat markets, traders said. There are few weather worries for the U.S. winter wheat crop, which is now dormant, they said.

 

In the eastern Midwest, soft red winter wheat is expected to escape significant damage from a cold snap, DTN Meteorlogix said. Hard red winter wheat in the Plains will also be largely protected from damage by snow cover, the private weather firm said.

 

The markets also shrugged off weekly export inspections data, which came in well below trade expectations. Inspections for the week ended Dec. 27 were 10.889 million bushels, while estimates ranged from 16 million to 21 million bushels.

 

Heading into 2008, there are ideas that index funds will start rebalancing on the fifth business day of 2008, which is Jan. 8, AgResource Company said in a market comment. The funds are expected to sell soybean and wheat contracts and buy corn.

 

Earlier this month, prices rallied to new all-time highs on fears about tight global wheat supplies. CBOT March wheat on Dec. 17 hit a record of US$10.09 1/2.

 

 

Kansas City Board of Trade

 

KCBT wheat futures finished mostly higher on short covering after March wheat fell limit down on Friday, a floor trader said. Traders wanted to even up positions going into the new year, he said.

 

Non-commercial speculative funds cut long KCBT wheat futures and options positions by 1,309 lots and increased short positions by 10 lots, the CFTC said in another supplemental report. The funds were net long 30,398 contracts.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures were a follower of the CBOT for most of the day session, floor traders said. CBOT collapsed late, but the MGE stayed firm on light positioning in thin volume, a trader said.

 

Volume was light and trading was choppy during the session, with many market participants absent ahead of the New Year holiday, floor traders said. The CBOT, KCBT and MGE will be closed Tuesday.

 

At the MGE, the funds increased longs by 222 lots, shorts by 298 lots and were net long 16,685 contracts, according to the CFTC.