March 16, 2006

 

US Wheat Review on Wednesday: Modestly lower, trims losses late

 

 

U.S. wheat futures ended with modest losses Wednesday, recovering from earlier declines as position squaring ahead of the close helped trim the losses, floor sources said.

 

The market remains fixated on the weather in the U.S. Central Plains, said Vic Lespinasse of AG Edwards & Sons. The market is acting very confident that the rain predicted for this weekend will happen, he said.

 

Wheat had been supported by light fund buying early in the session, but the funds didn't remain buyers and that helped erase the early firm tonnee, he added.

 

The market has shed some of its recent record open interest as longs have exited some of their positions, he said.

 

Hard red wheat futures remain the leader and it continued to struggle for most of the day a CBOT floor analyst said.

 

There wasn't much news out today and what news the market had was not positive, he noted.

 

The U.S. Department of Agriculture reported that Iraq canceled the purchase of 102,501 metric tonnes of U.S. hard red winter wheat before the opening.

 

Mostly dry conditions are expected in the U.S. Central Plains before light rain develops in the south portion of the region on Friday, DTN Meteorlogix said. Additional moisture is forecast for the weekend through Monday in the region. Amounts may range from 0.25-1.00 with locally heavier amounts expected, DTN added.

 

On technical charts, May was unable to fill the gap created in Tuesday's session and settled just above its 50-day moving average.

 

CBOT May wheat slipped 1/2 cent to US$3.62 per bushel, and July also declined 1/2 cent to US$3.73 1/2.

 

In CBOT trades, R.J. O'Brien bought 2,200 July, Citigroup bought 300 May, Fimat bought 500 July, Prudential bought 300 May, Rand bought 200 July, ABN Amro bought 200 May and the USA Trading division of Man Financial bought 200 May.

 

Fimat sold 400 May and 200 July, Prudential sold 200 May, R.J. O'Brien sold 200 May, and Rand sold 200 May.

 

Commodity funds were net buyers of an estimated 1,000 contracts.

 

 

Kansas City Board of Trade

 

KCBT wheat futures ended lower but up from earlier levels as the weather continues to be the focus of the trade, a KCBT trader said. Forecasts that Kansas could receive between 1/2 and 2 inches of rain in parts of the state continues to weigh on the market, he added. Position squaring ahead of the close helped trim the losses, he added.

 

KCBT May settled 2 1/2 cents lower to US$4.21 1/4 cents per bushel, and July fell 1 3/4 cents to US$4.24 1/2.

 

On technical charts, KCBT May settled above its 50-day moving average but below its 10-day and 20-day moving averages.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures settled lower but above the lows of the day in quiet activity, a flour source said.

 

Some support was generated by the spreading of spring wheat futures versus hard red futures, however, once that dried up light technical sell stops were touched off on the way to the day's lows before futures staged a mild recovery late, the source said.

 

MGE May wheat settled 2 3/4 cents lower at US$4.11 1/2, and July declined 2 cents to US$4.17.

 

Minneapolis grain receipts totaled 234 train cars of wheat and 78 cars of durum Wednesday.

 

On Thursday, the USDA is scheduled to release the weekly export sales report for the week ended Mar. 9 at 7:30 CST. Analysts expect sales between 300,000-550,000 metric tonnes. Sales for the week ended Mar. 2 totaled 440,800 metric tonnes.