February 23, 2006

 

US Wheat Review on Wednesday: Down on consolidation, profit taking

 

 

U.S. wheat futures ended moderately lower Wednesday, but off of levels reached late in the session as spillover weakness from the rest of the grains floor and the lack of fresh buying interest pressured Chicago Board Of Trade wheat with Kansas City Board of Trade slipping in late afternoon trade to end near their lows of the day, sources said.

 

"It was a little bit of a correction type trade today after the recent strength, a CBOT commission house analyst said.

 

There was little fresh news out Wednesday, a floor analyst said. It remains unseasonably dry in the hard red wheat belt and there was news about Iraq buying wheat but there was not much difference from Tuesday's news out there, "and a bull has to be fed everyday," he added.

 

Dry weather with just a slight chance for sprinkles or light showers in central Texas is forecast over the next several days in the hard red wheat belt, DTN weather said.

 

The market was due for a correction, a commission house analyst said about Wednesday's weakness. Futures have rallied almost 30 cents from early last week and the news is the same. Plus the funds were not interested in buying wheat Wednesday, he said.

 

Additional price weakness was generated by spillover weakness from corn and soybean futures with double digit losses posted in soybeans for the second straight session.

 

Reports that Iraq had purchased 1.5 million metric tonnes of U.S. and Canadian wheat had little impact with one trader commenting that the market was "waiting on the USDA to confirm it."

 

CBOT March wheat settled 7 cents lower at US$3.65 1/2 per bushel. May wheat fell 6 1/2 cents to US$3.77 1/2.

 

In CBOT trades, ABN Amro bought 500 May, Calyon Financial bought 600 May, O'Connor bought 400 May, Prudential Financial bought 500 May and R.J. O'Brien bought 200 May.

 

Calyon sold 300 May, Fimat sold 500 May, Iowa sold 200 May and Man Financial sold 200 May.

 

 

Kansas City Board of Trade

 

KCBT March fell 8 1/2 cents to US$4.31 1/2, May declined 7 cents to US$4.39.

 

"It was a turnaround Tuesday type of session," a Kansas City trader said. There wasn't any change in recent news, but the market consolidated after the recent gains, he added.

 

Man Financial bought 1,300 March and 600 March; ADM bought 1,800 July and sold 200 March; FIMAT bought 300 May and sold 600 March.

 

Fimat spread 500 March-May; Refco spread 350 March-May; UBS and ADM each spread 400 March-July.

 

 

Minneapolis Grain Exchange

 

MGE futures finished slightly lower in sympathy with Chicago and KC wheat but were supported by inter market spreading, a MGE floor source said.

 

There was decent buying of MGE July and selling of KCBT December today, which helped support spring wheat, the source said.

 

Buy orders below recent price levels were hit and added support, the floor source added.

 

MGE March wheat fell 2 cents to US$4.13 1/4 with MGE May down 1 cent to US$4.22 1/2.