April 27, 2007

 

US Wheat Review on Thursday: Mixed; most consolidate recent gains

 

 

U.S. wheat futures ended mixed Thursday, pulling back from early gains amid the absence of follow-through speculative buying interest.

 

July CBOT wheat ended 1/2 cent higher at US$5.21, July KCBT wheat settled 1/4 cent higher at US$5.04, and July MGE wheat finished 4 1/4 cents higher at US$5.37 1/4.

 

Chicago wheat remained the upside leader of U.S. wheat futures, with the active July future setting a new contract high before profit-taking pressure emerged, analysts said.

 

The market remains underpinned by a yet to be determined amount of winter wheat crop damage, said John Kleist, senior analyst with Top Third Ag Marketing in Chicago.

 

However, after satisfying a near-term upside technical objective, the market was constrained by export demand, Kleist added.

 

Carryover momentum from overnight trade buoyed futures in early trade, but the exhaustion of fund buying opened the door for traders to book some profits, analysts said. A quiet news front, with non-eventful weekly export sales and talk that the market had adequately priced in potential crop damage generated pressure to take the edge off the market, analysts added.

 

Nevertheless, global supply concerns remain underpinning features in the market, but the inability to sustain price strength after setting new contract highs may be a warning sign that the market is overbought, Kleist added.

 

Meanwhile, the DTN Meteorlogix Weather Forecasts said southern Plains winter wheat areas will have normal to below-normal temperatures during the balance of this week. This trend may allow some recovery of wheat as the crop continues following the harsh freeze during the first weekend of April.

 

Australia's central and eastern wheat crop areas, from South Australia to southern Queensland, continue to show an outlook toward receiving showers during the next five days. Rainfall will not total more than three-quarters of an inch; however, the moisture will be the first notable round of rainfall in almost three months, and will give topsoil a boost of moisture ahead of planting the next wheat crop, Meteorlogix forecasts.

 

In CBOT pit trades, JP Morgan bought 500 July, Man Financial bought 700 July, Rand Financial bought 300 July and UBS Securities bought 500 December. Fimat sold 1,000 July, Man Financial sold 300 July and 500 December. Speculative funds were estimated net buyers on the day.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures ended mixed, with prices unable to hold early price strength.

 

Overall activity was light, with consolidative trade featured aside from some light spreading in the May/July spread, a KCBT floor broker said.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended higher, managing sustained price strength on intermarket spreads, with lingering concerns over potential spring planting worries and smaller Canadian acreage underpinning features, analysts said.