March 15, 2007

 

US Wheat Review on Wednesday: Closes lower on fund selling, CBOT corn

 

 

U.S. wheat futures finished lower Wednesday on fund liquidation and spillover weakness from the neighboring corn market, traders said.

 

Chicago Board of Trade May wheat ended 4 cents lower at US$4.62 1/2 per bushel, Kansas City Board of Trade May wheat closed down 4 3/4 cents at US$4.86 3/4, and Minneapolis Grain Exchange May wheat closed 2 cents lower at US$5.04 1/2.

 

A late bounce in CBOT corn and short covering helped wheat prices come off their session lows, floor traders said. The session low for CBOT May wheat was US$4.56.

 

During much of the day session, however, long speculative liquidation and fund selling weighed on prices, a CBOT floor broker said. Funds sold an estimated 6,000 contracts at CBOT.

 

Also, there were few fresh inputs to push prices higher, an analyst said. News that Egypt's General Authority for Supply Commodities, or GASC, bought 120,000 metric tonnes of Russian wheat in a tender was bearish because the U.S. did not get the business, he said.

 

On Thursday, the U.S. Department of Agriculture will release weekly wheat export sales figures for the week ended March 8. Analysts surveyed by Dow Jones Newswires estimated sales would range from 350,000 to 600,000 metric tonnes.

 

Looking ahead, precipitation in U.S. wheat-growing areas that has been negative for prices will likely continue to weigh on the market, an analyst said.

 

Winter wheat in the Southern Plains will benefit from rains expected in the region, but that won't be until early next week, DTN Meteorlogix reported. Currently, it's mostly dry and warm except for east and central Texas, which has seen a couple inches of rainfall, the weather firm said.

 

Wheat also will likely continue to get its direction from corn, a CBOT floor trader said.

 

Market participants are eagerly awaiting the release of the USDA's planting intentions and grain stocks report on March 30. It is expected to show a sizable increase in U.S. corn acres as producers try to take advantage of high prices and sharp demand for ethanol.

 

 

Kansas City Board of Trade

 

Funds sold an estimated 2,000 contracts at KCBT, a floor trader said. Otherwise, the market followed action in CBOT corn, he said.

 

There is an increased focuse on the beneficial moisture hitting the Plains, the trader added.

 

"That's certainly weighing on the market," he said.

 

There also was some interest in spread trades, mainly buying July and selling September, the trader added. Overall, trading activity was "really slow," he said.

 

In pit trades, JP Morgan sold 500 May and 800 July. Fimat bought 450 May, while Man Financial bought 500 May and 300 December. Prudential bought 300 May.

 

 

Minneapolis Grain Exchange

 

Trading activity was relatively quiet and largely trailed movements in CBOT corn, a floor trader said. News that Egypt did not buy U.S. wheat was negative, he added.

 

In general, supportive inputs are lacking with good growing weather seen in the central U.S, the trader said.