US Wheat Review on Thursday: Pulls back on late, year-end profit-taking

 

 

U.S. wheat futures closed lower on the last day of the year, stumbling across the finish line after a round of late profit-taking.

 

Chicago Board of Trade March wheat settled down 3 1/4 cents at US$5.41 1/2 per bushel, up 17 cents on the week. Kansas City Board of Trade March wheat fell 4 1/4 cents to US$5.36 1/4, and Minneapolis Grain Exchange March wheat dropped 6 1/4 cents to US$5.45.

 

Traders wanted to book some profits at the end of the month and year, a CBOT floor analyst said. Before the setback, the markets were higher on positioning, short-covering and spillover support from other markets, traders said.

 

When traders return after the long holiday weekend, they will want to see whether index funds come in to buy the grain markets. Expectations for index fund buying have been supportive recently, although it's not known exactly how many contracts the funds will buy, if they buy.

 

"Maybe they've already done some of" the buying, a broker said. "You don't know where they're at. I think that, no matter what, the idea is very supportive for the market for the first part of 2010."

 

The index fund buying is expected to come as funds rebalance their portfolios. Expectations of the buying may result in a "buy the rumor, sell the fact" scenario, traders said.

 

"If we don't see new money flow on Monday, I would assume that there's going to be some really big disappointment among the directional traders who have been trying to front run this market," said Dave Marshall, an independent marketing advisor and commodities broker.

 

 

Kansas City Board of Trade

 

Demand did not help underpin prices. Weekly U.S. wheat export sales of 370,300 tonnes were within expectations.

 

Egypt's state-owned wheat buyer, the General Authority for Supply Commodities, bought 240,000 tonnes of Russian wheat in a tender and none from the U.S. Egypt is known as a price sensitive buyer, and U.S. wheat is too expensive to compete on the global market.

 

KCBT March wheat ended up 14 3/4 cents n the week.

 

 

Minneapolis Grain Exchange

 

Traders will look ahead to U.S. Department of Agriculture crop reports when they return to start the new year. The government on Jan. 12 is slated to issue its first estimates on U.S. winter wheat plantings and update forecasts on world supply and demand.

 

MGE March wheat closed up 13 1/2 cents on the week.