March 7, 2006

 

US Wheat Review on Monday: Lower on weather forecasts, export news

 

 

U.S. wheat futures finished lower Monday as scattered precipitation over the weekend in the U.S. Central Plains and forecasts for additional moisture this week kept prices on the defensive from the opening bell, sources said.

 

News that Iraq had purchased 150,000 metric tonnes of U.S. wheat, less than most observers had anticipated, also was viewed negatively, they added.

 

Improved prospects for moisture pushed futures lower and there was little else to trade off of Monday, a CBOT floor analyst said.

 

U.S. Central plains wheat areas have a chance to receive above-normal moisture during the next week to 10 days, DTN Meteorlogix weather said, with the heavier amounts forecast for the northern, central and eastern areas of Kansas south to north-central Texas, Meteorlogix said.

 

In the eastern U.S. Midwest, there is a chance for showers or rain developing on Wednesday, with rainfall averaging 0.25-1.00 inch during this period. Temperatures should average near to above normal in the region on Tuesday and Wednesday.

 

News from the Iraqi Grain board that it had purchased 150,000 metric tonnes of U.S. wheat and 500,000 tonnes of Canadian wheat was also a disappointment, a floor trader said. The sales total was originally supposed to be more than the amount announced with the U.S. share expected to be greater than the amount reported, the trader said.

 

In addition, to the Canadian and U.S. purchases, Iraq is planning to purchase 350,000 metric tonnes of Australian wheat and 150,000 tonnes of German wheat as part of this tender, an official with the Iraqi Grain Board said.

 

News from the U.S. Department of Agriculture that weekly export inspections totaled 15.31 million bushels for the week ended Mar. 2 had little impact. The figure was within analysts estimates of 13 million - 18 million bushels.

 

On technical charts, CBOT May wheat finished beneath its 10-day moving average. However, the daily bar chart for May wheat shows that prices are still in a solid uptrend, a technical analyst said. Wheat bears would have to produce a close beneath last week's low of US$3.71 to obtain some fresh near-term downside momentum, the analyst said.

 

CBOT March wheat settled 3 1/2 cents lower to US$3.70 per bushel. May wheat fell 5 cents to US$3.80, and July dropped 4 1/2 cents to US$3.91 1/2.

 

In CBOT trades, Fimat bought 300 May, R.J. O'Brien bought 400 May, Goldenberg-Hehmeyer bought 300 May, JP Morgan bought 300 May and the Refco division of Man Financial bought 200 May.

 

Man Financial sold 500 May, Goldenberg-Hehmeyer sold 500 May, the Refco division of Man Financial sold 300 May, UBS sold 300 May and 100 July, and Kottke sold 200 May.

 

In spread trading, Fimat bought 1,500 July wheat and sold 1,500 July corn.

 

 

Kansas City Board of Trade

 

KCBT wheat futures settled lower as moisture concerns in the U.S. Central Plains and the results of the Iraqi wheat purchase pressured prices a KCBT floor trader said. However, "once the market opened lower, that was it, the bears weren't going to press it lower," he said.

 

Once the selling dried up, a little short covering came in and helped prices recover in quiet trading, he added.

 

KCBT March fell 7 1/4 cents to US$4.35 3/4 per bushel with May declining 6 cents to US$4.39 1/2, and July down 5 1/2 cents to US$4.43.

 

In KCBT trades, Frontier Futures bought 250 May and 300 July, ABN Amro bought 100 May and 300 July, the Refco division of Man Financial bought 500 May and 100 July, and Prudential Financial bought 100 May and 200 July.

 

Man Financial sold 200 May and 300 July, ABN Amro sold 200 May, and Country Hedging sold 100 May, 250 July and 100 December.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures finished mostly lower as futures at the KCBT "remain in the driver's seat" regarding price direction, an MGE floor trader said.

 

MGE March wheat inched up 1 cent to US$4.21, May fell 5 3/4 cents to US$4.23, and July lost 5 1/2 cents to US$4.29 1/2.

 

Spring wheat continues to follow the hard red winter market, he added.

 

Minneapolis grain receipts totaled 50 cars of wheat and 121 of durum versus 197 cars of wheat and 26 train cars of durum a year ago.

 

Several U.S. states are expected to release their weekly crop conditions report for the week ended May 5 late Monday afternoon.