March 14, 2006

 

US Wheat Review on Monday: Down on forecast, technical selling, rain

 

 

U.S. wheat futures settled sharply lower Monday as forecasts predicting the potential for moisture in the U.S. Central Plains this weekend, technical selling and rainfall overnight in parts of the U.S. soft red winter wheat growing region kept futures on the defensive, sources said.

 

Although most of the U.S. Central Plains is predicted to remain dry for much of this week, forecasts calling for improved chances of moisture next weekend pushed prices lower from the opening bell with futures remaining in negative territory all day, floor traders said.

 

The weather models project a good chance of for moisture next weekend in the U.S. Central Plains, said Joel Burgio, a meteorologist with DTN Meteorlogix weather.

 

Rainfall overnight and into Monday in the U.S. soft red wheat growing areas added pressure, with recent moisture helping the soft red crop as it will soon emerge from dormancy, a floor analyst said.

 

Rain and thunderstorms of up to .50-2.00 inches and locally heavier moved through the eastern U.S. Midwest during the weekend, with additional amounts expected on Monday, DTN Meteorlogix weather said. Drier conditions are expected until Thursday, when light precipitation returns to parts of the region, Meteorlogix added.

 

Technical and spillover selling from the KCBT added to the declines in Chicago, the analyst added.

 

The weather forecast was bearish and there was not much of any other news to trade off of, the analyst noted.

 

Export inspections totaled 22.576 million bushels, the U.S. Department of Agriculture reported, higher than the 14-16 million bushels expected by analysts.

 

On technical charts, CBOT May wheat traded at its lowest level since Feb. 16, and settled beneath its 20-day moving average for the first time since Jan. 24.

 

CBOT March wheat fell 14 cents to US$3.67 1/2 per bushel, and July also declined 14 cents to US$3.79 1/2.

 

In CBOT trades, Prudential bought 1,500 May, Fimat bought 800 May, R.J. O'Brien bought 300 May and JP Morgan bought 400 May.

 

JP Morgan sold 600 May, Man Financial sold 500 July, Calyon Financial sold 400 May, Rand sold 400 May, the Refco division of Man Financial sold 400 May, UBS sold 400 May and ABN Amro sold 300 May.

 

Commodity fund selling was estimated at 3,500 contracts.

 

 

Kansas City Board of Trade

 

KCBT wheat futures ended sharply lower in active trading as forecasts for potential precipitation this weekend pushed prices lower, a KCBT floor trader said.

 

There was little buying interest. The news is the weather and the market will continue to follow the weather for the near term, he noted.

 

KCBT May ended 18 1/2 cents lower to US$4.34 3/4 cents per bushel, and July dropped 22 cents to US$4.37 1/2.

 

On technical charts, May wheat ended below its 20-day moving average for the first time since Jan. 18.

 

In KCBT trades, ADM bought 500 July and 100 May, Frontier Futures bought 150 May, 250 July and 100 September, Fimat bought 350 May and 250 July, Prudential Financial bought 600 May and 400 July and the Refco division of Man Financial bought 500 July and 250 May.

 

ADM sold 400 July and 200 May, Frontier futures sold 500 May and 450 July, FC Stonnee sold 800 July, Fimat sold 400 May and 400 July, Country Hedging sold 200 May and 500 July and Man Financial sold 300 May, 500 July and 1,000 December.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures finished sharply lower as the market continues to act in a role of following the other wheat markets, sources said.

 

MGE May wheat fell 13 cents to US$4.21 3/4, and July ended down 14 1/4 cents to US$4.25 1/2. MGE May traded at its lowest levels since last Monday.

 

Minneapolis grain receipts totaled 90 train cars of wheat and 12 cars of durum Monday, compared to 222 cars of wheat and 53 cars of durum a year ago.

 

Later this afternoon, weekly crop progress reports are due from several winter wheat states.