February 25, 2006

 

US Wheat Review on Friday: Mostly higher in choppy trade

 

 

U.S. wheat futures settled mostly higher Friday, continuing their recent choppy trading pattern in modest activity, sources said.

 

There was not much news to move the market higher, a floor trader said. The weather remains the same in the U.S. hard red winter wheat belt, and the funds were mostly absent from the market on Friday, he added.

 

Spillover strength from corn and soybeans and stronger outside markets helped provide support to wheat, the trader said.

 

The U.S. Department of Agriculture reported Friday morning that 2005-06 weekly wheat export sales totaled 510,400 metric tonnes. From this total, weekly soft red wheat sales were 72,800 tonnes.

 

Traders and analysts had expected overall sales between 350,000 and 550,000 tonnes.

 

Sales were in line with expectations, but news that Egypt purchased 240,000 metric tonnes of French wheat overnight was viewed negatively, sources said. It would be nice to get that business, but domestic wheat prices are too high, a commission house analyst said.

 

Egypt's General Authority for Supply Commodities, or GASC, bought 240,000 metric tonnes of French wheat for shipment March 21-31, officials said. GASC paid US$136.50 per tonne on a free-on-board basis, a GASC source said.

 

There is a chance for light showers through north-central Texas Friday night into Saturday, but it will be mainly dry over the weekend and into the early part of next week across the hard red winter wheat belt, DTN Meteorlogix weather said.

 

Prospects of the Central U.S. plains receiving meaningful rainfall over the next 7-10 days are poor, said Joel Burgio of DTN Meteorlogix weather.

 

CBOT March wheat settled 2 cents higher at US$3.68 1/4 per bushel. May wheat gained 2 1/2 cents at US$3.80.

 

In CBOT trades, Calyon Financial bought 500 May, Prudential bought 1,000 May, and R.J. O'Brien bought 500 May.

 

Calyon Financial sold 300 May and Rand Financial sold 400 May and 200 July.

 

In spread trades, Term bought 1,000 May-March and JP Morgan bought 400 March-May.

 

Commodity fund buying was estimated at 2,000 contracts.

 

 

Kansas City Board of Trade

 

KCBT March finished unchanged at US$4.34 per bushel, and May settled 1/2 cent higher at US$4.39 1/2.

 

Trading was choppy for much of the session with the nearby months making new lows late in the session.

 

However, firm prices in the new-crop months helped rally the nearby to unchanged as the market added in a little weather premium before the closing bell, a KCBT trader said.

 

Until a good soaking rain across much of the hard red wheat belt occurs, it will be hard to break this market, the trader added.

 

Trading was light and "nervous" according to floor sources.

 

In KCBT trades, Prudential Financial sold 2,000 July.

 

In spread trading, ADM bought 1,000 May-March.

 

 

Minneapolis Grain Exchange

 

Light buying supported spring wheat futures, an MGE floor source said. People who are long spring wheat versus hard red winter wheat supported their positions on Friday, he said.

 

Active spreading trading with traders rolling out of their March positions was also a feature, he added.

 

MGE March wheat gained 2 1/4 cents to US$4.18, with May up 2 cents at US$4.26 1/4 per bushel.