March 16, 2007

 

US Wheat Review on Thursday: Finishes lower on fund liquidation

 

 

U.S. wheat futures settled in negative territory Thursday, pressured by technical and fund selling in thin activity, analysts and traders said.

 

Chicago Board of Trade May wheat ended down 7 3/4 cents at US$4.55 1/2 per bushel. Kansas City Board of Trade May wheat closed 7 cents lower at US$4.79 3/4, and Minneapolis Grain Exchange May wheat closed 7 3/4 cents lower at US$4.96 3/4.

 

Funds sold an estimated 4,000 contracts at CBOT.

 

There was little fresh fundamental news out for wheat during the day session, traders said. Prices opened lower, despite gains overnight on e-cbot, due to a lack of follow-through buying and scattered speculative selling, traders noted.

 

Bulls tried to push prices higher but couldn't find support, so traders decided to bail out on the long side, a trader said. The downside turned out to be the path of least resistance, added Shawn McCambridge, analyst with Prudential Financial.

 

"We just couldn't generate any kind of buying interest," McCambridge said. "When we couldn't generate anything to the upside, we went down. It was much easier to go down."

 

Spillover weakness from the CBOT corn market also weighed on wheat, analysts said.

 

There was little impact from weekly export sales data, which McCambridge described as "pretty routine."

 

The U.S. Department of Agriculture reported sales for the week ended March 8 totaled 443,400 metric tonnes, which was in line with expectations. Analysts had expected to see sales in the range of 350,000 tonnes to 600,000 tonnes.

 

The weekly sales were 5% above the previous week and 14% over the prior four-week average, according to the USDA. Big buyers were Mexico, which bought 64,400 tonnes; Nigeria, which bought 46,600 tonnes; and South Korea, which bought 41,600 tonnes.

 

Looking ahead, McCambridge said the wheat markets will continue to watch the weather for any signs of threats to the winter crop. So far, conditions look favorable, which does not offer any support for prices, he said.

 

Warm temperatures in the U.S. Central and Southern Plains are expected to pull the majority of hard red winter wheat crops out of dormancy by next week, meteorologists said.

 

"It looks like even all the way up through Nebraska we're going to see average temperatures warm enough to get the crop out of dormancy," said Joel Widenor, manager of Cropcast,a forecasting service.

 

Rains also should benefit the crop in the near term, meteorologists said. A few HRW wheat growing areas have seen enough precipitation recently, but "for the most part, they need a good rain event to get them off to a good start with these warmer temperatures," Widenor said.

 

Wheat futures also will likely continue to follow corn's price movements in the near term, traders added.

 

 

Kansas City Board of Trade

 

KCBT saw moderate volume amid steady pressure from fund selling, a floor trader said. Early fund selling squashed an attempt to rally prices, he noted.

 

At KCBT, funds sold an estimated 1,000 contracts, he said.

 

Declines for the day looked overdone, and prices could bounce higher Friday, the trader added.

 

 

Minneapolis Grain Exchange

 

Activity in CBOT corn and wheat largely dictated action at MGE, a floor trader said. There were no fresh supportive inputs to boost prices, he added.

 

Export sales seemed a little disappointing, the trader said.