February 21, 2008

 

US Wheat Review on Wednesday: Lower on profit taking from recent gains

 

 

U.S. wheat futures ended lower Wednesday, succumbing to profit taking pressure, as an absence of fresh fundamental news failed to provide an incentive for aggressive buying to return to the market.

 

May CBOT wheat ended 14 cents lower at US$10.33 1/2, May KCBT wheat settled 10 1/4 cents lower at US$10.75, and May MGE wheat finished 17 1/2 cents lower at US$15.30.

 

"The wheat market has digested all its bullish news for the time being, opening the door for long liquidation and profit taking amid ideas the market's upward run has ran its course," said Shawn McCambridge, senior grains analyst with Prudential Bache Commodities in Chicago.

 

Fundamentally there has been no change in the market, but a change in mentality has occurred, with speculative funds shifting upside ideas to other crops, viewing wheat's upside potential as limited at all-time highs, he added.

 

The potential for crop or acreage problems are starting attract buyers to other grain and oilseed markets and without prices finally backing off their bullish run to uncharted territory, traders felt comfortable booking some profits, analysts said.

 

"Technically, Minneapolis wheat was the leader on the way up and, that market's inability to challenge recent highs Tuesday served as a signal that upside movement has run its course," McCambridge added.

 

In CBOT pit trades, speculative fund selling was estimated at 2,000 contracts.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures ended lower in quiet trade as the market continues to correct lower. Overall trade was light, with business pretty sparse, a KCBT floor broker said. The liquidation of the March future was featured, with the March/May spread moving from a 2 cent inverse to a 3 cent carry in the spread late, he added.

 

Looking forward, traders anticipate nearby futures chop around in a trading range from US$10 to US$12 amid the absence of fresh news with still a month before winter crops come out of dormancy, a KCBT floor analyst said.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended lower, continuing Tuesday's setback in sporadic trading, analysts said. Price weakness in the cash market added to the losses, while anticipation of Japan's wheat tender overnight that may include spring wheat provided underlying support, a MGE floor analyst said.