March 25, 2006

 

US Wheat Review on Friday: Lower on follow through liquidation

 

 

U.S. wheat futures settled modestly lower Friday as spillover weakness from hard red wheat futures in Kansas City and light follow through selling from Thursday's declines limited buying interest, CBOT floor traders said.

 

Trading activity was quiet with a lack of fresh fundamental news adding to the weak tonnee, they added. Light short covering on the close helped trim some of the losses, they added.

 

"It was a pretty dull session," a CBOT commission house analyst said. There wasn't much to trade off of with the lack of fresh news continuing to limit order flow, he added.

 

The market continues to grind lower, a floor analyst said. Conditions have improved in the hard red wheat belt and the soft red crop has more than adequate moisture so recent crop concerns have been reduced, he added.

 

Another storm system is forecast to reach the U.S. Central Plains in the latter half of next week, bringing additional precipitation to the region in the form of rain and snow, DTN Meteorlogix weather said.

 

Mostly dry conditions are expected until Sunday in the region with light rain/snow developing from Kansas northward before ending Monday. Rain is forecast on Wednesday with a rain/snow mix developing on Thursday. Precipitation totals of 0.30-1.50 inches are forecast with locally heavier amounts expected, DTN Meteorlogix added.

 

On technical charts, CBOT May remained below its 100-day moving average and the 14-day relative strength index stands at 34.3 in May.

 

CBOT May wheat fell 1 1/2 cents to US$3.42 1/2 per bushel, and July slipped 1 3/4 cents to US$3.54 1/2.

 

In CBOT trades, Calyon Financial bought 1,000 May, Fimat bought 400 May and 300 July, Refco bought 100 May and Tenco bought 100 May

 

Iowa Grain sold 800 May, Prudential Financial sold 800 May, the Refco division of Man Financial sold 500 May ABN Amro sold 200 May and Man Financial sold 400 July.

 

Commodity fund selling was estimated at 1,200 contracts.

 

 

Kansas City Board of Trade

 

KCBT wheat futures settled moderately lower as speculative selling kept prices on the defensive for much of the session, a KCBT floor trader said. News before the opening that Iraq had purchased 150,000 metric tonnes of U.S. hard red winter wheat provided light support on the opening bell, he noted.

 

However, follow through liquidation from Thursday's session and forecasts for rain later next week kept prices on the defensive and within relatively narrow ranges, he noted.

 

May KCBT has fallen over 50 cents from the high reached on Mar. 10 and declined 20 cents from last Friday's settlement.

 

In KCBT trades, ADM Investor Services bought 700 July and 200 May, ABN Amro bought 1,000 July and 300 May, Man Financial bought 100 May and 200 July, and UBS bought 200 May and 100 July.

 

UBS sold 1,000 September and 400 July, Prudential Financial sold 300 July, Man Financial sold 400 May and 200 July, ABN Amro sold 500 July, and ADM Investor Services sold 400 July and 150 May.

 

KCBT May fell 6 cents to US$4.01 1/2 per bushel, and July declined 5 1/2 cents to US$4.05 1/4.

 

 

Minneapolis Grain Exchange

 

Light technical selling pressed MGE spring wheat futures though light bull market spreading was also noted, an MGE floor source said. The market is following hard red wheat to some extent, but it's also searching for direction and not finding any, the source added.

 

MGE May wheat ended 2 3/4 cents lower at US$3.92 3/4, and July also settled 2 3/4 cents lower at US$3.98 3/4.

 

Cash grain receipts in Minneapolis totaled 152 train cars of wheat and five cars of durum Friday.

 

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

 

On Monday, the U.S. Department of Agriculture is scheduled to release the weekly export inspections at 10:00 a.m. CST.