March 24, 2006

 

US Wheat Review on Thursday: Moderately lower on technical, fund selling

 

 

U.S. wheat futures ended Thursday with moderate losses and at nearly 2-month lows as technical and fund based selling continue the recent pattern of weaker prices, floor sources said. The market has had a lot of technical, psychological and financial damage done to it recently, a floor trader said. Technical traders' systems are now indicating that it's time to sell and they are liquidating, he added.

 

Commodity fund selling was estimated at 6,100 contracts.

 

"There was not a whole lot of interest in trading today," a commercial trader said. The funds were long roughly 7,000 contracts in Chicago wheat before the opening and the recent selling interest continued, he added.

 

After the recent moisture in the U.S. Central Plains, the focus on the weather has dissipated, with liquidation the recent feature, a commission house analyst said.

 

Mainly dry conditions are expected Friday and Saturday in the U.S. Central Plains before another round of precipitation is forecast through the northern and eastern areas of the region, DTN Meteorlogix said. Amounts expected between 0.10-0.50 inches with locally heavier possible.

 

Farther out, the 6-to-10 day forecast calls for moisture to average near to above normal south and east and near to below normal in the northwest, DTN Meteorlogix added. Temperatures are expected to average near to below normal.

 

Thursday morning's news from the U.S. Department of Agriculture that weekly export sales were 482,600 metric tonnes for the week ended March 16 was in line with expectations but had little impact. Included in that total was 50,400 tonnes for delivery in the 2006-07 crop year.

 

On technical charts, CBOT May settled beneath its 100-day moving average. The 14-day relative strength index stands at 34.10 in May.

 

CBOT May wheat declined 5 1/4 cents to US$3.44 per bushel, and July fell 5 3/4 cents to US$3.56 1/4.

 

In CBOT trades, Rosenthal bought 400 May, JP Morgan bought 300 May, Rand bought 200 May and 200 July, Fimat bought 200 May and UBS bought 200 May.

 

Iowa Grain sold 3,700 May, ABN Amro sold 400 May, Citigroup sold 500 May, JP Morgan sold 500 July, Fimat sold 500 May, Rand sold 300 May, Man Financial sold 200 May and RJ O'Brien sold 300 July and 100 December.

 

 

Kansas City Board of Trade

 

KCBT wheat futures settled moderately lower as heavy fund based technical selling pushed prices lower, a KCBT trader said. May fell below the US$4.10 level which touched off sell stops and led to additional technical selling on the move the lows of the session, he said.

 

Volume was active as the funds liquidated some more of their positions, he added.

 

Commodity fund selling was estimated at 10,000 contracts and after Thursday's session, fund long positions are now estimated at 30,000 contracts, the trader said.

 

On technical charts, May gapped open lower, beneath Wednesday's low and never traded above the opening range.

 

May settled below its 50-day moving average and at its lowest level since Feb. 1.

 

In KCBT trades, Man Financial sold 1,000 May and 1,100 July, ABN Amro sold 1,000 May and 2,200 July, Shay Grain sold 1,000 July, ADM Investor Services sold 700 July, and Frontier Futures sold 700 July.

 

ABN Amro bought 1,000 July and Frontier futures bought 700 July.

 

KCBT May declined 9 1/2 cents lower at US$4.07 1/2 per bushel, and July fell 9 3/4 cents at US$4.10 3/4.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures were also pressed by technical selling, an MGE trader said. Long liquidation and the absence of buying interest at higher levels added to the declines, a floor source said. There wasn't much buying interest except near the lows of the session, he added.

 

On technical charts, May wheat traded at its lowest level since Jan. 24.

 

MGE May wheat settled 9 1/2 cents lower at US$3.95 1/2, and July dropped 8 1/2 cents at US$4.01 1/2.

 

Cash grain receipts in Minneapolis totaled 100 train cars of wheat and 29 cars of durum compared to 296 cars of wheat and 62 cars of durum a year ago.

 

On Friday, the Commodity Futures Trading Commission is scheduled to release the commitment of traders report as of March 21 after the close of trading.