February 24, 2006

 

US Wheat Review on Thursday: Mostly higher in thin, choppy trade

 

 

U.S. wheat futures settled mostly higher Thursday in thin, choppy trading, as the lack of fresh news ahead of options expirations on Friday kept the market consolidating near recent levels, sources said.

 

Light fund buying around midday helped rally Chicago Board of Trade futures to their highs of the session, floor sources said.

 

However a lack of additional buying interest and the absence of fresh inputs limited the rally attempt, with traders describing the activity as "sloppy."

 

Late price weakness in soybeans also acted as a drag on futures, a commission house broker said.

 

Before the opening, the International Grains Council forecast 2006-07 world wheat output was expected to total 588 million metric tonnes, down 7 million from last month's forecast and below its 2005-06 production estimate of 615 million tonnes.

 

The news had little market impact, with one analyst noting that this was already anticipated, given the concerns about world wheat production.

 

Dry weather is expected across much of the U.S. Central Plains over the next several days with the chance for light showers in northeast Texas in the first part of the period, DTN Meteorlogix weather said.

 

Temperatures are expected near to below normal in the southern region and near to above normal in the northern central Plains in the period, Meteorlogix added.

 

CBOT March wheat settled 3/4 cents higher at US$3.66 1/4 per bushel. May wheat ended unchanged at US$3.77 1/2.

 

In CBOT trades, Calyon Financial bought 600 May, ABN Amro bought 300 May, O'Connor bought 300 March, Citigroup bought 200 May, Fimat bought 200 May and R.J. O'Brien bought 300 May.

 

Fimat sold 100 May, and O'Connor sold 100 May.

 

In spread trades, JP Morgan bought 600 May-March.

 

Commodity fund buying was estimated at 2,400 contracts.

 

 

Kansas City Board of Trade

 

KCBT March gained 2 1/2 cents to US$4.34, and May finished unchanged at US$4.39.

 

"The market consolidated after recent losses and was left looking for fresh news, a KCBT trader said. The locals were waiting on the funds and the funds were largely out of the market, he added.

 

Traders estimated 2,000-3,000 March-May traded as participants exited out of March positions ahead of Friday's option expirations and next week's first notice day.

 

In KCBT trades, Country Hedging bought 200 March, 100 July and sold 100 May and 200 July. Frontier Futures bought 200 March, 300 May and sold 700 May and 400 July. Fimat bought 600 May, 400 July and sold 500 May and 100 March. UBS bought 600 May.

 

In spread trading Prudential Financial spread 200 May-March, and Fimat spread 200 July-May.

 

 

Minneapolis Grain Exchange

 

Light bull spreading in March-May helped support the nearby spring wheat futures months, an MGE floor source said.

 

Hedge related pressure was noted in the new crop months.

 

MGE March wheat settled 2 1/2 cents higher at US$4.15 3/4, with May up 1 3/4 cents at US$4.24 1/4 per bushel.

 

On Friday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the week ending Feb. 16 at 7:30 a.m. CST (1230 GMT). Analysts expect wheat export sales between 350,000-550,000 metric tonnes. Wheat export sales totaled 624,100 tonnes in the week ended Feb. 9.