February 15, 2006

 

US Wheat Review on Tuesday: Slightly lower; recovers from early losses

 

 

U.S. wheat futures ended lower Tuesday but near their highs for the session as earlier selling interest dried up near the close and short covering helped to trim losses, sources said.

 

Follow-through selling from Monday's weak close, thought to be long liquidation, and profit taking after recent strength weighed on prices earlier in the day, sources said.

 

CBOT March wheat slipped 3/4 cent to US$3.47 1/4 per bushel. May wheat fell 1 1/2 cents to US$3.58 1/2. KCBT March settled 2 cents lower to US$4.13, and MGE March wheat lost 4 cents to US$3.95.

 

There wasn't much buying interest for most of the day, a floor analyst said. Follow-through weakness from Monday and losses in KC and MGE wheat futures kept CBOT wheat following the other markets, the analyst added.

 

Late in the session, KCBT staged a rally, with May wheat recovering 8 cents from its low, providing support to CBOT and MGE markets, a floor trader said.

 

Futures have sold off from last week's levels, but there remains concern over the conditions in parts of the hard red winter wheat belt in regard to moisture, a commission house analyst said. Although the forecast is calling for scattered precipitation, the hard red balance sheet remains tight, and the market remains sensitive to the weather in the Plains, he added.

 

The market is also waiting on the results of Iraq's tender for wheat, now expected on Wednesday. Traders have attributed some of the recent price declines to reports that Iraq is looking at Canadian and E.U. sources for the wheat, with U.S. wheat prices too high.

 

Iraq is believed to have tendered for up to 1 million tonnes of optional origin wheat.

 

On technical charts, both CBOT May and KCBT May settled below their 10-day moving averages, with MGE May settling beneath its 10-day and 20-day moving averages.

 

In CBOT trades, JP Morgan bought 800 March, Man Financial bought 800 May, Fimat bought 500 May and 200 March, Prudential Financial bought 500 March, Rand Financial 200 March, FC Stonnee bought 200 December and ADM bought 100 July.

 

JP Morgan sold 300 March, Calyon sold 200 March, ABN Amro sold 300 March, Man Financial sold 500 May, O'Connor sold 500 May and 100 March, Rand Financial sold 200 July and UBS sold 200 July.

 

Commodity fund selling was estimated at 1,500 contracts.

 

In other wheat news, Argentina has sold 4.575 million metric tonnes of 2005-06 wheat as compared to 6.795 million tonnes this time last year, the Agriculture Secretariat reported.