February 15, 2007

 

US Wheat Review on Wednesday: Finishes lower on technical, fund pressure

 

 

U.S. wheat futures settled lower Wednesday, well below levels reached early in the session as technical and fund selling pressured prices, sources said.

 

CBOT March wheat fell 8 cents to US$4.51, KCBT March wheat declined 10 1/4 cents to US$4.77 1/4, and MGE March wheat settled 5 3/4 cents lower at US$4.91 3/4.

 

"From a technical standpoint, taking out Tuesday's lows was a negative," said Brian Hoops, president of Midwest Market Solutions in Yanktonne, S.D.

 

On daily open auction technical charts, CBOT March wheat fell beneath Tuesday's low of US$4.55 3/4 and traded just above the recent low of US$4.47 1/2, set in early January.

 

Locals sold wheat and ran into technical sell stops, adding to the slide in prices, a floor analyst added.

 

Weaker corn values also added downside pressure, but a small recovery in corn values near the close helped stabilize wheat, a local trader said.

 

The market couldn't break beneath theJanuary low for wheat and that brought in some position squaring, floor sources said.

 

The U.S. Department of Agriculture released its 10-year projections for acreage, production, and trade during the session and although the report contained little bullish or bearish news, it was a "buy the rumor, sell the fact" scenario weighing on wheat, an MGE floor source said.

 

Price direction in wheat on Thursday depends on what happens overnight and the weekly export sales report, a CBOT source said.

 

On daily open auction charts, CBOT March ended below its major moving averages and settled at its lowest level since Jan. 10.

 

In CBOT trades, Fortis sold 400 May, Rand sold 400 May and Fimat bought 400 May.

 

In spread trading, JP Morgan bought 1,500 Mar.-May.

 

Overall commodity fund selling was estimated at 2,000 contracts.

 

 

Kansas City Board of Trade

 

Hard red wheat futures ended lower, trading down to its weakest levels in a week as technical selling and the lack of fundamental news pressed wheat futures, a KCBT floor trader said. Spread trading was active early in the session, with flat price trading more active as the session progressed, he added.

 

Despite the weakness, March was able to hold support at US$4.75 on daily open auction technical charts, a floor analyst said.

 

ADM bought 200 May, Harvest States bought 200 March and JP Morgan sold 300 March.

 

In spread activity, Man Financial bought 1,000 Mar.-May.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures ended lower as spillover from weaker hard red winter wheat futures and technical weakness weighed on the market, a floor broker said.

 

Technical selling helped push the market below stops around US$4.90 in March, but it bounced back above that level on the absence of additional selling, the broker added.

 

Large spread trading was noted as participants rolled out of March and into May. UBS, Fimat and Prudential were active spread traders, sources said.

 

On daily open auction charts, March spring wheat traded an outside day, above and below Tuesday's high and low and settled beneath its major moving averages.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release its export sales report for the week ended Feb. 8 at 8:30 a.m. EST (1330 GMT). Analysts expect sales between 400,000-650,000 metric tonnes.