July 18, 2006

 

US Wheat Review on Monday: Down on tech sales, spillover from corn. soy

 

 

U.S. wheat futures settled lower Monday, as spillover selling from corn and soybeans and technical selling pressured prices late in choppy, two-sided trading, sources said.

 

Hot and dry weather in the spring wheat belt over the weekend and news of a sale of 120,000 metric tonnes of U.S. white wheat to Egypt over the weekend supported prices initially, sources said.

 

However, the lack of additional buying interest and weakness in corn and soybeans helped limit interest in the market, floor sources said.

 

There was little fresh news and that contributed to the choppy trade, a commercial connected analyst said. The weather forecast in the spring wheat growing area remains very hot and mostly dry but that is not fresh news, he added.

 

Midday forecasts were little changed from overnight forecasts, said Joel Burgio, meteorologist with DTN Meteorologix Weather. There is no significant rainfall expected in the spring wheat belt, he said. Temperatures are expected to vary but in general the region remains in an above normal temperature pattern and below normal rainfall pattern in the near term, he added.

 

Export inspections were 13.583 million bushels, near the lower end of the 10-18 million bushels expected by analysts. The news had little impact, floor sources said.

 

CBOT September wheat declined 4 1/2 cents to US$3.93 per bushel, and December fell 5 cents to US$4.12 1/2.

 

In CBOT trades, Fimat bought 300 September and 200 December, UBS bought 200 September, JP Morgan bought 200 September, and FC Stonnee bought 200 September.

 

Rosenthal sold 200 September, RJ O'Brien sold 200 September, O'Connor sold 200 September, JP Morgan sold 200 December and FC Stonnee sold 200 September.

 

Commodity fund buying was estimated at 300 contracts.

 

On technical charts, September finished beneath its 10-day, 20-day and 40-day moving averages.

 

 

Kansas City Board of Trade

 

KCBT wheat futures ended lower as the lack of fresh news limited trading, with sources there noting very light activity for much of the session. There was no fresh news out so the market treaded water until small sell stops were touched off late helping move prices to lower levels, a KCBT trader said.

 

Earlier in the day, futures were supported by the heat in the spring wheat belt and news that Egypt had purchased US white wheat over the weekend as well. However, a lack of additional buying interest helped trim the gains, sources said.

 

In midday KCBT trades, Man Financial bought 350 September and 200 December, UBS sold 300 September, JP Morgan sold 100 September and Fimat sold 150 September. ADM was noted selling September and December late.

 

KCBT September fell 4 3/4 cents to US$4.90 3/4 cents per bushel, and December dropped 6 1/2 cents to US$5.05.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures ended lower, despite the hot temperatures and general absence of rainfall over the weekend and forecasts expecting a continuation of that pattern, an MGE trader said. The market opened higher on the heat and dryness over the weekend but there was no follow through, with the market moving lower and hitting light sell stops on the way down, he said. Late in the session another round of technical selling pressed prices to session lows ahead of light position squaring, the floor trader said.

 

The market is searching for value and the recent volatility appears to have kept some people out of the market, he said.

 

Minneapolis grain receipts totaled 79 cars of wheat and 140 cars of durum, compared to 84 cars of wheat and 84 cars of durum a year ago.

 

MGE September wheat settled 5 3/4 cents lower at US$5.02 1/4, and December lost 5 1/4 cents to US$5.07 3/4

 

Monday afternoon, the U.S. Department of Agriculture is scheduled to release the weekly crop progress report for the week ended July 16. Analysts expect spring wheat conditions to slip 3-5 percentage points in the good-to-excellent category.

 

Last week, 42% of the U.S. spring wheat crop was rated in good-to-excellent condition. Eighty-seven percent of the crop was headed, compared to the five-year average of 69%.