August 29, 2006

 

US Wheat Review on Monday: Extends gains on tech, fundamental support

 

 

U.S. wheat futures ended higher across the board Monday, bolstered by a mix of supportive fundamental and technical features.

 

Chicago Board of Trade December wheat futures ended 6 1/4 cents higher at US$3.84 3/4, December Kansas City wheat settled 2 cents higher at US$4.75 and Minneapolis December wheat ended 3 1/4 cents per bushel higher at US$4.63 1/4.

 

The markets continued their rebound off previous lows, with positive technical signals and tightening world balance sheet projections serving as the catalysts for the upward price movement, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

Chicago wheat led the upward assault once again amid a function of short covering, as speculative funds have found it easier to cover shorts in Chicago than to add length in Kansas City and Minneapolis wheat, McCambridge added.

 

Nevertheless, there is supportive underlying sentiment in the market, as uncertainties tied to production in the southern hemisphere on top of lost output and quality issues in Europe providing a the fundamental justification for the advances, traders said.

 

However, the market may be chasing some demand away with the rally in prices, as it will take time for production concerns for Australia and Argentina to be verified and end-users will not chase the market unless there is certainty of crop losses, McCambridge added.

 

Meanwhile, the DTN Meteorlogix forecast said rain showers are making a start at restoring soil moisture in the Southern Plains, which has been hit hard this year by hot, dry weather, but more is needed before winter wheat planting gears up at the end of September.

 

Rain in Europe is boosting soil moisture and relieving crop stress in a region depleted by a very hot summer, but is also slowing harvest and other field work, Meteorlogix reports. In the southern hemisphere, Australia and Argentina are getting little or no rain, which is a concern for spring crop development, Meteorlogix added.

 

In CBOT pit trades, JP Morgan bought 1,300 December, ADM Investor Services and Rosenthal each bought 500 December, and Fimat and Man Financial each bought 300 December.

 

On the sell side, Fimat sold 1,000 December, Tenco sold 500 July, and ABN Amro sold 300 December. Speculative funds were estimated buyers of 2,400 contracts.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures stumbled lower in unison with Chicago, feeding off supportive world production concerns and technically motivated buying, traders said.

 

Featured buyers included ADM Investor Services, and FIMAT Futures. Frontier Futures, FC Stonnee and ADM Investor Services were key sellers.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures followed the lead of Chicago wheat, quietly pushing higher, with light country selling and inter-market spreads featured attractions, traders said.