March 10, 2006

 

US Wheat Review on Thursday: Finish mixed ahead of USDA report

 

 

U.S. wheat futures ended mixed Thursday, with futures in Chicago finishing weaker on light fund selling, while KCBT and MGE futures ended unchanged in the nearby to modestly higher in the deferred contracts.

 

Volume was modest with the market looking ahead to Friday's U.S. Department of Agriculture supply and demand report scheduled for release at 7:30 a.m. CST (1330 GMT).

 

The average of 11 analysts surveyed by Dow Jones expect U.S. wheat ending stocks at 543 million bushels, 1 million more than the 542 million estimated by the USDA in February.

 

Light fund selling pressured CBOT futures with low volume magnifying the impact, said Vic Lespinasse, of AG Edwards & Sons.

 

The consensus forecast is for continued dry weather in the U.S. Central Plains but not all forecasters share that outlook and futures turned lower in early trade on those concerns, he said.

 

Losses were trimmed late in the day on consolidation ahead of the report before additional selling interest emerged on the close, floor sources said.

 

Better than expected U.S. weekly export sales had little market impact, floor traders said. The USDA reported wheat export sales at 440,800 metric tonnes for the week ended March 2. This total included 113,000 tonnes of wheat sold for the 2006-07 crop year which begins June 1.

 

Analysts had expected wheat sales between 200,000 and 400,000 metric tonnes.

 

Sales of soft red winter wheat totaled 17,700 tonnes.

 

On technical charts, CBOT May settled beneath its 10-day moving average and traded an outside day, with a higher high and a lower low than the previous session.

 

There is still a threat for scattered showers on Friday and then again during the weekend in pats of the U.S. Central Plains, according to Joel Burgio of DTN Meteorlogix weather. But the 6-10 day outlook looks for below normal rainfall and above normal temperatures in much of the region, he said.

 

CBOT March wheat settled 5 1/2 cents lower to US$3.70 3/4 per bushel. May fell 3 1/2 cents to US$3.81, and July declined 2 1/2 cents to US$3.93 1/4.

 

In CBOT trades, Calyon Financial bought 500 May, Fimat bought 500 May, JP Morgan bought 400 May, R.J. O' Brien bought 700 May, O'Connor bought 600 May and the Refco division of Man Financial bought 600 May.

 

Fimat sold 1,500 May, Calyon Financial sold 1,000 May, the Refco division of Man Financial sold 1,000 May, O'Connor sold 700 May and Prudential Financial sold 500 May.

 

Commodity fund selling was estimated at 2,000 contracts.

 

 

Kansas City Board of Trade

 

KCBT wheat futures finished unchanged to modestly higher Thursday as trading continued its recent light pattern, sources said. The market is waiting on Friday's reports, with the bears not interested in selling it very aggressively, a floor trader said. People are looking ahead to next week's weather forecasts and Monday afternoon's crop progress reports for direction, he added.

 

Support was generated by ideas that light precipitation received parts of the hard red wheat belt overnight was not enough and not in areas that really need the moisture the most, the floor trader said.

 

KCBT March ended unchanged US$4.39 per bushel with May finishing 1/4 cent higher at US$4.43 3/4, and July up 3 1/4 cents to 4.51 1/2.

 

In KCBT trades, ABN Amro bought 700 May and 100 July, Frontier Futures bought 300 May and 150 July and Man Financial bought 300 May, 200 July and 200 December.

 

ABN Amro sold 200 May and 300 July, Country Hedging sold 200 May and 200 July and ADM sold 400 July.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures finished higher as light commission house and commercial related buying lifted prices late in the session, as the market consolidated ahead of Friday's report, a floor source said.

 

MGE March wheat settled unchanged at US$4.30, May rose 1 1/4 cents to US$4.31 1/4, and July gained 2 3/4 cents to US$4.37 3/4.