August 9, 2006

 

US Wheat Review on Tuesday: Stumbles lower on technical sales

 

 

U.S. wheat futures stumbled lower Tuesday, pressured by speculative selling in a technical correction from prior gains.

 

Chicago Board of Trade September wheat futures ended 9 cents lower at US$3.84, September Kansas City wheat settled 14 3/4 cents lower at US$4.69 3/4 and Minneapolis September wheat ended 9 1/2 cents per bushel lower at US$4.71 1/4.

 

The price slide seems to be a technical move, with no real bearish fundamental news circulating to spur the sharp decline in prices, said Jack Scoville, analyst with the Price Futures Group in Chicago.

 

Floor traders said there was a general loss of a fundamental reason for the price drop, as the market seemingly ran out of gas to the upside, opening the door for it to continue its correction from higher levels.

 

The market flushed a few longs out of the market ahead of Friday's crop reports, as buying interest was exhausted, said Bill Nelson of A.G. Edwards. The market ran out of bullish news, finding itself overextended, leaving the market a prime candidate for a correction, he added.

 

A quiet demand front provided little support for prices, but with the spring wheat harvest 50% complete and no major improvement of spring wheat conditions, the decline was more technical in nature, traders said.

 

In CBOT pit trades, ABN Amro, and Calyon Financial were each sellers of 600 September, Iowa Grain sold 1,000 September, JP Morgan sold 1,000 December, and Man Financial sold 600 September and 500 December.

 

Speculative fund selling was estimated at 4,000 contracts.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat fell on technically inspired selling, with the active September futures plunging to its lowest level since June 19.

 

Floor traders said price declines accelerated once the September contract penetrated underlying support at its 100-day moving average - US$4.75 1/4.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures stumbled lower in unison with the rest of the U.S. wheat complex, pressured by technically motivated sales.

 

Active contracts posted sizable losses, but failed to challenge any major support levels, with analysts looking for mild support to emerge after the spring wheat harvest moves past 50% complete. U.S. Department of Agriculture reported the harvest at 49% complete Monday.