January 5, 2008

 

US Wheat Review on Friday : Closes mixed amid profit-taking

 

 

U.S. wheat futures ended mixed Friday, with nearby contracts tumbling on profit-taking after the markets rallied limit up the two previous days, traders said.

 

Chicago Board of Trade March wheat closed 13 1/2 cents lower at US$9.31 1/2 per bushel, up 46 1/2 cents on the week. Kansas City Board of Trade March wheat settled 17 1/2 cents lower at US$9.48, up 34 cents on the week. Minneapolis Grain Exchange March wheat finished 12 1/2 cents lower at US$10.83 1/4, up 53 1/4 cents on the week.

 

The markets were due for a setback after wheat futures climbed limit up, 30 cents higher, on Wednesday and Thursday amid speculative buying, traders said.

 

There also was a lack of fresh, fundamental news to feed the bulls, traders said. Weekly export sales for the week ended Dec. 27 of 118,700 metric tonnes were below trade estimates of 200,000 to 550,000 tonnes.

 

The sales were weak even considering that the reporting period included the Christmas holiday, an analyst said. Cancellations are buybacks of 5,600 tonnes were considered negligible.

 

"There hasn't been any fresh news in this wheat market for some time," said Tom Leffler, owner of Leffler Commodities. "Of course, it didn't get any help from the export sales."

 

In CBOT pit trades, MF Global bought 300 March and 100 July and sold 100 March. Prudential and Citigroup each bought 200 March, while JP Morgan sold 200 March. Fortis bought 200 July.

 

Deferred contracts rose in late trading on technical buying, a CBOT floor trader said. CBOT July wheat rose 5 1/4 cents to US$8.17 1/4.

 

Index funds on Tuesday are expected to rebalance positions and sell of thousands of wheat and soybean contracts while buying corn, according the AgResource Company. The firm estimates index funds have to sell more than 40,000 contracts of soybeans and wheat, and secure 17,000 contracts of corn.

 

Traders are also waiting for the USDA's Jan. 11 crop report to see updated estimates on winter wheat seedings and U.S. and world wheat ending stocks. There may be some positioning next week going into the report, an analyst said.

 

Private analytical firm Informa Economics on Friday estimated Argentina's 2007-08 wheat production at 15.850 million metric tonnes, up 850,000 tonnes from its previous estimate and the 15.0 million tonnes projected by the USDA in December. Informa pegged 2008-09 E.U. wheat production at 140.0 million metric tonnes, well above the USDA's 2007-08 estimate of a 120.5-million-tonne crop.

 

Informa estimated India's 2008-09 wheat crop at 72.0 million tonnes, compared to the USDA's 2007-08 crop estimate of 74.89 million tonnes in December. Some industry members have said they are concerned dryness will impact final output.

 

India's wheat sowing for the crop marketing year that starts in April inched closer to the government set target of 27 million hectares following late planting in some key provinces, the Indian government said. Wheat had been sown in 26.6 million hectares as of Jan. 4, down from 27.5 million hectares a year earlier, according to the government.

 

 

Kansas City Board of Trade

 

KCBT wheat futures were weaker for most of the day session on profit-taking, a floor trader said. A lack of fund buying and weakness in outside markets weighed on the market, he said. KCBT March wheat briefly touched limit down, 30 cents lower, before trimming losses.

 

Leffler said he "continued to be amazed" that KCBT July wheat, which represents the new crop, has held above US$8 per bushel considering that hard red winter wheat in the U.S. Plains has received a good amount of moisture. KCBT July wheat ended up 1 cent at US$8.55.

 

The new-crop is likely finding strength from "the overall bullishness of the overall grain and soy complex," Leffler said. "They're afraid there's not going to be enough production out there."

 

Some more precipitation is possible in winter wheat areas of the southern and southwestern Plains this weekend, which will bring some improvement to soil moisture, DTN Meteorlogix said. However, the private weather firm noted Plains wheat conditions are still "very uneven due to adverse effects of dry soils during the fall planting season."

 

 

Minneapolis Grain Exchange

 

MGE wheat futures finished mixed in mostly quiet trading, a floor trader said. Profit-taking was the feature of the session, and gains in the back months came in thin volume on mostly technical buying, he said.

 

Weekly export sales were low, but the market did not pay them much attention because they covered the traditionally-slow holiday period, the trader said. There is generally "nobody around" buying during the week of Christmas, he said.