August 23, 2006

 

US Wheat Review on Tuesday: Lower; plains rains, lack of demand support

 

 

U.S. wheat futures stumbled lower Tuesday, succumbing to pressure attributed to a lack of supportive demand news, technical weakness and improved winter wheat planting prospects.

 

CBOT December wheat futures ended 5 1/2 cents lower at US$3.80, December Kansas City wheat settled 5 1/4 cents lower at US$4.62 1/2 and Minneapolis December wheat ended 8 1/4 cents per bushel lower at US$4.48 3/4.

 

The absence of fresh export demand has left the market on shaky legs, and with beneficial rains moving through the southern plains promoting opportunities of timely hard red winter wheat plantings, downside movement emerged as the path of least resistance, analysts said.

 

The trade is a bit disappointed with nothing happening on rumored demand interest from Brazil and Iraq, and with technical charts looking weak, sellers remained in control of direction, analysts added.

 

The market is in need of supportive news to stem the bearish tide, but with beneficial rains restoring moisture to parched soils in the hard red winter wheat belt, many longs began to throw in the towel on positions, traders said.

 

"The rains are an added twist to the equation, but bearish technical outlooks played a key role in the process," a trader said. The market has yet to reach a level that is sparking strong demand, and with market technicians pay close attention to exhausted upside movements, sell signals are easily generated, he added.

 

Meanwhile, the DTN Meteorlogix forecast said another round of rain in southern Plains wheat areas is occurring Tuesday. This comes after some heavy rains occurred Monday in the southeastern Plains, with isolated amounts of more than three inches reported in Oklahoma. The rainfall is will improve the soil moisture outlook for winter wheat planting this fall, Meteorlogix reports.

 

In CBOT pit trades, Tenco was a buyer of 500 December, Fimat, JP Morgan and O'Connor each bought 200 December. ADM Investor Services and RJ O'Brien each sold 500 December, ABN Amro and Rand Financial each sold 200 December with JP Morgan a seller of 200 July. Speculative fund selling was estimated at 1,400 contracts.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures ended lower, pressured by improved planting prospects in the hard red winter wheat belt. Speculative led selling was a featured attraction, with technical selling emerging after prices failed to challenge overhead resistance levels. Speculative long liquidation was a feature, with inter-market spreading playing a role in moderate volumes, traders added.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat fell in unison with other wheat market, as the absence of demand news send long exiting positions, traders said. The theme was consistent, with the active December contract sliding down to test last weeks' low. A lack of farmer selling in the market made it more of long liquidation feature than any fundamental feature for spring wheat futures, a MGE broker said.