January 26, 2007

 

US Wheat Review on Thursday: Ends up on position squaring, firm corn

 

 

U.S. wheat futures ended higher Thursday, recovering from losses set early in the session as firm corn futures and position squaring supported prices, sources said.

 

CBOT March wheat traded down to its lowest level since Jan. 11 at one point in the session.

 

CBOT March wheat rose 2 3/4 cents to US$4.68 3/4, KCBT March wheat rallied 7 1/4 cents to US$4.94, and MGE March wheat gained 2 cents to US$4.97.

 

Futures traded higher early in the session, following the gains set in the overnight trade before weaker corn prices and the lack of speculative interest reversed the early strength, sources said.

 

A modest bounce in corn futures around mid-session helped wheat recover, kicking off short covering to finish higher, sources said.

 

Wheat had little positive fundamental news out Thursday and the market moved lower as a result, said Brian Hoops, president of Midwest Market Solutions in Yanktonne, S.D.

 

The weekly export sales were poor, Japan's purchase of wheat in its weekly tender was routine and corn traded lower. However, when corn bounced higher, wheat did to as it continues to follow corn, he added.

 

The USDA reported weekly export sales were 246,100 metric tonnes, below analyst estimates of 300,000-600,000.

 

Short covering by local traders after the losses set in Wednesday's trade also added to the late gains, a floor analyst said.

 

News that the International Grains Council projected 2006-07 word wheat production slightly higher than previous estimates had little impact, a floor source said.

 

Wheat could see additional "evening up" on Friday but market direction remains tied to corn, a commission house analyst said.

 

On daily technical charts, March wheat filled an upside gap created in mid-January at lower levels and remained below its 10-day moving average.

 

In the U.S. soft red winter wheat belt, temperatures are expected to average below normal with precipitation near-to-below normal, DTN Meteorologix Weather said.

 

 

Kansas City Board of Trade

 

Good short covering out of the CBOT spilled over into hard red wheat futures Thursday, an analyst said. Corn futures continue to drive price gains, a floor source said.

 

Wheat should see additional short covering ahead of the weekend on Friday, the floor source added.

 

Spread trading was light with Prudential Financial bear spreading 200 March-May.

 

In mid-day KCBT trades Frontier bought 300 July, Prudential bought 100 May and sold 150 March, JP Morgan sold 100 March and 100 July.

 

On daily technical charts, KCBT March traded an outside day, with a higher high and a lower low than Wednesday's session. March finished above its 10-day and 20-day moving averages.

 

In the hard red winter wheat belt, the 6-to-10-day outlook calls for temperatures to average near-to-below normal, with precipitation near-to-below normal north and central areas, near-to-above normal south.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures ended modestly higher in a quiet trading day, a floor trader said. Spring wheat remains a follower of the other markets with scale- down commercial buying also noted. Exports were routine and farmers are not selling any wheat, adding to the light trade, the trader said.