January 30, 2007

 

US Wheat Review on Monday: Finishes lower on technical selling, weak corn

 

 

U.S. wheat futures finished lower Monday as technical weakness and spillover selling from weaker corn futures weighed on prices in the absence of fresh news, sources said.

 

CBOT March wheat fell 7 cents to US$4.56 1/2, KCBT March wheat declined 9 3/4 cents to US$4.78 1/4, and MGE March wheat fell 6 1/4 cents to US$4.87 1/4.

 

Technically the market was weak last week and wheat saw some follow- through technical weakness Monday, said Brian Hoops, president of Midwest Market Solutions in Yanktonne, S.D.

 

In addition, March took out last week's low in Monday's trade, and that added some additional technical pressure, Hoops added.

 

On daily open auction charts, March week traded down to and settled at its lowest level since Jan. 11.

 

Spillover selling from weaker corn values also added to the negative tonnee, floor sources noted. March corn settled at US$4.00 per bushel, its lowest settlement price since Jan. 12.

 

Export inspections were released during the session and came in near the low end of analyst expectations, with an MGE floor source terming inspections "dismal."

 

The U.S. Department of Agriculture reported that wheat inspected for export totaled 16.7 million bushels for the week ended Jan. 25, near the low end of the 16-22 million bushels expected by analysts.

 

The inspections were near the low end of expectations and wheat needs to average about 17.7 million bushels to meet the USDA's projection, Hoops said.

 

News that Egypt purchased 120,000 metric tonnes U.S. soft red wheat over the weekend had little impact and a sale of 110,000 metric tonnes of U.S. white wheat to unknown destinations for delivery in 2007-08 before the opening was also unable to generate any support, a floor trader said.

 

It looks like wheat needs to go a little bit lower to stimulate demand, Hoops noted.

 

Without any fresh news, wheat will continue to follow corn on Tuesday, a floor analyst said.

 

On daily open-auction charts, March wheat finished below its major moving averages and beneath its 200-day moving average for the first time since Jan. 10.

 

In the 6-to-10 day weather forecast for the U.S. soft red winter wheat belt temperatures are expected to average below to well below normal and precipitation should average near to below normal in the period, said DTN Meteorologix Weather.

 

In CBOT trades, JP Morgan sold 200 March and RJ O'Brien sold 200 March.

 

In options trading, ADM sold 1,000 May US$4.70 calls and 1,000 May US$4.80 calls.

 

Commodity fund selling was estimated at 600 contracts.

 

 

Kansas City Board of Trade

 

Hard red wheat futures finished moderately lower in light trading, sources said. The market broke early on speculative selling and extended its losses when corn futures moved to their lows, a KCBT floor source said.

 

On daily open auction technical charts, KCBT March filled on the downside an upside gap created earlier in January and finished below its major moving averages and at its lowest level since Jan. 10.

 

In mid-day KCBT trades, Man Financial bought and sold 200 March wheat, Fimat bought 200 March, and UBS sold 100 July

 

In the hard red winter wheat belt, the 6-to-10 day weather outlook calls for temperatures to average below normal, with precipitation near-to-below normal, DTN Meteorologix Weather said.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures settled lower in very light trade, as spring wheat futures continue to follow the other commodity markets, a floor broker said. Trading was the slowest it has been in several months, the broker added. Light commercial buying at the lows of the session helped to push prices off their lows, he added.

 

On technical charts, MGE March wheat partially filled to the downside an upside price gap created between Jan. 11 and Jan. 12, and settled at its lowest level since Jan. 11.