March 18, 2006
US Wheat Review on Friday: Bounces higher on position squaring
U.S. wheat futures finished higher Friday, snapping a string of four consecutive losing sessions in relatively modest trading volume, sources said.
Short covering ahead of the weekend helped futures recover from the losses set this week, they added.
Traders evened up some of their positions amid forecasts for precipitation in the U.S. hard red wheat belt, a floor analyst said.
Spot month May declined over 30 cents this week from its high last Friday.
The market was due for a bounce, a floor trader said. It has already priced in the moisture forecast for the plains this weekend and some people decided to trim their positions, he added.
A storm system is expected to move into the U.S. Central Plains this weekend, bringing precipitation to the region, DTN Meteorlogix Weather Service said. Light rain is forecast on Friday with totals of up to .50 inch through Friday night in parts of southern Oklahoma and into northern Texas.
Over the weekend a combination of showers and thunderstorms and late- developing snow will occur in the region, Meteorlogix weather said. The heaviest amounts, from .50-1.50 inches, could occur in southeast Kansas, central and western Oklahoma, and north-central to north-eastern Texas.
Central and western Kansas western Oklahoma, the Texas Panhandle and southwestern Nebraska will have total precipitation of .25-1.00 inch with locally heavier amounts. Snowfall of 5-10 inches should occur in northern Kansas through Nebraska, Meteorlogix added.
On technical charts, CBOT May traded an inside day, confined within the price range established Thursday. May settled beneath its 50-day moving average, but remained above its 100-day moving average of US$3.48 1/4.
CBOT May wheat gained 4 3/4 cents to US$3.57 1/2 per bushel, and July rose 5 1/4 cents to US$3.70.
In CBOT trades, Fimat bought 1,500 May, Goldenberg-Hehmeyer bought 500 May, Deutsche Bank bought 500 December, Citigroup bought 400 May, JP Morgan bought 300 May and ABN Amro bought 300 May.
Calyon Financial sold 800 May, the Refco division of Man Financial sold 500 May, Fimat sold 400 May, Tenco sold 200 July and Man Financial sold 500 May.
In spread trading Iowa Grain sold 700 December wheat and bought 700 December corn.
Kansas City Board of Trade
KCBT wheat futures ended higher as position evening and light technical buy stops early in the session underpinned prices, a KCBT floor trader said.
"The market rallied on the lack of selling and locals didn't want to add to their short positions ahead of the weekend and the forecast for moisture," the trader said.
In KCBT trades, Frontier Futures bought 150 May and 400 July, ADM Investor Services bought 400 July and 300 December, ABN Amro bought 400 May and 200 July, Man Financial bought 400 May and 600 July, and Prudential Financial 500 May and 100 July.
ABN Amro sold 200 May and 200 July, ADM Investor Services sold 200 May and 200 July, Fimat sold 350 July and 150 May, and Man Financial sold 800 May and 700 July.
KCBT May gained 7 3/4 cents to US$4.21 1/2 cents per bushel, and July rose 4 3/4 cents to US$4.22 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 ended higher as firm prices in Kansas City helped provide support early, an MGE trader said. Light commercial buying in the absence of selling also provided some support, he added.
Looking ahead for Monday, the feeling is that one has to be long, not short, he said.
MGE May wheat settled 3 3/4 cents higher at US$4.06 1/4, and July rose 4 1/2 cents to US$4.13 1/2.
Minneapolis grain receipts totaled 73 train cars of wheat and 10 cars of durum Friday compared to 192 cars of wheat and 20 cars of durum one year ago.
Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the commitments of traders report as of March 14.
On Monday, the U.S. Department of Agricultural is scheduled to release the weekly export inspections at 10 a.m. CST.
