January 9, 2008

 

US Wheat Review on Tuesday: Ends mixed as spillover support wears off

 

 

U.S. wheat futures ended mixed Tuesday in a turnaround from strong earlier gains as late selling weighed on the markets, traders and analysts said.

 

Chicago Board of Trade March wheat rose 4 1/2 cents to US$9.07 1/2 per bushel. Kansas City Board of Trade March wheat slipped 6 1/2 cents to US$9.09 1/4, and Minneapolis Grain Exchange March wheat fell 10 1/4 cents to US$10.42.

 

Newedge USA LLC, formerly known as Fimat, was a late seller of about 2,000 contracts at the CBOT, a trader said. The sale weighed on CBOT and KCBT wheat futures, which were trading in relatively thin volume, he said.

 

Earlier in the session, CBOT March wheat almost climbed limit up, 30 cents higher, on spillover support from gains in CBOT corn and soybeans, said John Kleist, analyst for Kleist Ag Consulting. There were also ideas that the market was rebounding from sharp losses Monday, a CBOT floor trader said.

 

Trading was very choppy in light volume. CBOT March wheat traded in a 30-cent range, from US$9.00 to US$9.30.

 

Looking forward, the trade is waiting for the USDA to release a crop report at 8:30 a.m. EST Friday. The report is expected to show an increase in winter wheat seedings from last year after wheat futures hit new all-time highs in 2007.

 

The USDA report also will include new estimates on wheat carryout and quarterly grain stocks. Traders said they did not expect to see any big surprises.

 

In other news, Egypt's state-owned General Authority for Supply Commodities canceled a tender Tuesday to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment Feb. 1-15, on a free-on-board basis. The tender was canceled due to unsuitable prices, Nomani Nomani, undersecretary of the vice chairman of GASC, told Dow Jones Newswires.

 

Traders largely shrugged off news of GASC's canceled order, although an analyst said it was "a little bit negative."

 

 

Kansas City Board of Trade

 

KCBT wheat futures were under pressure from commission house selling and also followed CBOT wheat, a KCBT floor trader said. There were large price swings in short periods of time, he said.

 

"Everything was just happening really fast," the trader said. There was "not a lot of volume."

 

Index funds were expected to have started rebalancing their positions Tuesday. Traders expected they would sell wheat contracts as part of the annual rebalancing, but it was unclear how much of that took place a trader said.

 

Traders won't really know how much the index funds have liquidated until the Commodity Futures Trading Commission releases its weekly Commitment of Traders report Jan. 18, the trader said. The report due out this Friday won't include the bulk of the expected selling, he said.

 

 

Minneapolis Grain Exchange

 

Nearby MGE wheat futures were weaker during much of the day session amid flat price selling of the March contract, a MGE floor trader said. Intermarket spreads were correcting, he said.

 

"Last summer, we were 80 cents under Chicago," the MGE trader said. "We were trading US$1.50 over all last week. Losing 30, even 60 cents is healthy for us."

 

Commission house selling also drove prices lower, a trader said. The market is waiting for the USDA report to come out Friday, he said.