February 28, 2006

 

US Wheat Review on Monday: Higher on modest late fund buying

 

 

U.S. wheat futures settled higher Monday, recovering from losses set earlier in the session as fund buying after midday in the absence of fresh news helped push futures higher.

 

There weren't too many buyers in the morning, and there weren't too many sellers in the afternoon, a floor analyst said.

 

The absence of fresh news and light selling interest pressured futures early in the session, with the market consolidating around recent lows, a floor source said.

 

Spillover selling from the soy complex added to the early price weakness, sources said.

 

However, light fund buying and the lack of selling interest helped prices recover to trade near last week's levels, sources said.

 

Commodity fund buying was estimated at 4,000 contracts.

 

A supportive near-term weather forecast had little market impact, with extremely warm temperatures expected on Tuesday in the U.S. Central Plains as the crop begins to end its dormancy period, DTN Meteorlogix weather said.

 

A round of showers is expected to move across the region later this week with up to one-quarter inch of rain in the driest areas of the Southwestern Plains and the Texas Panhandle. This moisture will give some very slight relief to the wheat crop, Meteorlogix said.

 

News that weekly wheat inspections totaled 17.720 million bushels for the week ended Feb. 23 were in line with analysts expectations between 15-20 million bushels and had little impact.

 

Just over 1.2 million bushels of wheat inspected for export were soft red winter wheat, the type traded at the Chicago Board of Trade, according to the U.S. Department of Agriculture

 

CBOT March wheat settled 5 cents higher at US$3.73 1/4 per bushel and May wheat gained 5 3/4 cents at US$3.85 3/4.

 

In CBOT trades, JP Morgan bought 1,000 May, Fimat bought 1,500 May and R.J. O'Brien bought 500 May.

 

Fimat sold 400 May, the Refco division of Man Financial sold 200 May, Rand Financial sold 200 May, JP Morgan sold 200 May, ABN Amro sold 200 May and ADM sold 100 May.

 

In spread trades, Tenco bought 1,000 March-May and Citigroup bought 500 May-March.

 

 

Kansas City Board of Trade

 

KCBT March settled 6 1/2 cents higher at US$4.40 1/2 per bushel, and May gained 7 cents to US$4.46 1/2, ending at its highest level in several sessions.

 

Fundamental news was scarce, a floor source said, with prices rising as "there was nothing for sale, not one ... thing," the source said.

 

Whether it was locals, funds or index funds, anyone who wanted to buy it, had to pay up for it, he said.

 

Volume was pretty mild all day, he added.

 

In midday KCBT trades, Man Financial bought 500 March and 500 July, UBS bought 400 May, Prudential Financial sold 300 July and 100 May and ABN Amro sold 300 July.

 

 

Minneapolis Grain Exchange

 

Spreading between spring wheat futures at the MGE and soft red wheat futures at the CBOT provided some support for spring wheat futures, a floor source at the MGE said.

 

Much of the day's trading activity consisted of spread trading between old-crop and new-crop months, the source said.

 

MGE March wheat finished 1 cent higher at US$4.19, with May up 3 cents at US$4.29 1/4 per bushel and July 2 1/4 cents higher at US$4.35 1/2.

 

In other wheat news, Tuesday is first notice day for the March future. Sources expect 1,000-1,500 contracts delivered against the CBOT March contract, 500-1,000 contracts against KCBT March and 500 contracts or less against the MGE March wheat future.

 

Argentina's 2005-06 wheat sales totaled 5.095 million metric tonnes as of Feb. 24, according to the Agriculture Secretariat.