July 28, 2006

 

US Wheat Review on Thursday: Up on export news; ideas losses overdone

 

 

U.S. wheat futures ended higher Thursday as better-than-expected weekly export sales and news that Egypt had purchased U.S. wheat overnight, including soft red winter wheat, provided early support for futures, sources said.

 

Ideas that recent losses were overdone and due for a correction also provided support, they added.

 

The U.S. Department of Agriculture reported weekly export sales totaled 464,700 metric tonnes, above the 300,000-400-000 tonnes expected by analysts.

 

In addition, Egypt's General Authority for Supply Commodities purchased 285,000 metric tonnes of U.S. and Canadian wheat overnight. Included in the total was 60,000 tonnes of U.S. soft white wheat and 55,000 tonnes of soft red winter wheat.

 

The market was overdone on the downside and due for a correction, floor sources said. Wednesday's late losses in Chicago September wheat pushed the spread relationship between Chicago wheat and the other wheat classes out of line, with Chicago wheat futures recovering those losses on Thursday, said Vic Lespinasse, of AG Edwards & Sons.

 

A lower Australian wheat production estimate from the Australian Wheat Board, was also noted as a supportive factor, a floor analyst said. The AWB forecast Australian wheat production between 18-20 million metric tonnes, down from its previous estimate of 23-25 million tonnes.

 

CBOT September wheat rose 5 3/4 cents to US$3.87 3/4 and December finished up 3 1/4 cents to US$4.07 1/2.

 

On day only technical charts, CBOT September and December traded an inside day, within Thursday's high and low range.

 

In CBOT trades, Calyon bought 600 September and 500 December, Fimat bought 600 December and 300 September, ABN Amro bought 500 December and Man Financial bought 300 September.

 

Iowa Grain sold 800 September, Calyon sold 600 September, JP Morgan sold 300 September and Ran Financial sold 200 September.

 

Commodity fund buying was estimated at 1,800 contracts.

 

 

Kansas City Board of Trade

 

KCBT wheat futures finished higher, underpinned by the positive export news this morning in light trading, a KCBT floor source said. The early gains were based on the exports, with a midday sell-off unable to breach the US$4.95 level in December, encouraging light speculative buying near the close, he added.

 

In midday KCBT trades, JP Morgan bought 300 September and 100 December, while selling 100 December and 100 March. Man Financial sold 400, ADM sold 200 December and Fimat sold 100 September and 200 December.

 

KCBT September settled up 3 1/2 cents at US$4.85 1/2 per bushel and December rose 5 3/4 cents to US$5.00 1/4.

 

December KCBT traded an inside day on day only technical charts and finished above its 100-day and 200-day moving averages.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures finished higher in light, choppy trading as inter-market spreading between spring wheat and KCBT hard red wheat helped provide light strength, an MGE commission house broker said. The market bounced around in choppy trading with light buying interest near the close helping futures end on a positive note, with not much selling interest late, he added.

 

Overall trading volume was light, he noted.

 

On day only technical charts, both September and December traded an inside day within the high and low range set in Wednesday's session.

 

MGE September wheat rose 2 1/4 cents to US$4.78 per bushel and December added on 5 1/2 cents to US$4.88 1/4.

 

Minneapolis grain receipts totaled 31 cars of wheat and 102 cars of durum, compared to 124 cars of wheat and 25 cars of durum a year ago.

 

Friday afternoon the Commodity Futures Trading Commission is scheduled to release the weekly commitment of traders report for the period ending July 25.