September 2, 2006

 

US Wheat Review on Friday: Sets back on pre-holiday positioning

 

 

U.S. wheat futures ended lower across the board Friday, setting back from the week's prior gains ahead of an extended holiday weekend.

 

December Chicago Board of Trade wheat ended 2 3/4 cents lower at US$4.19 1/2; December Kansas City Board of Trade wheat settled 7 1/4 cents lower at US$4.85; and December Minneapolis Grain Exchange wheat finished 2 3/4 cents lower at US$4.70 1/2.

 

The market had booked in some strong gains over the past few sessions on month-end positioning and fundamental features, but heading into a long weekend with a lack of fresh demand news, futures were due to step back, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

Trade consolidation was a featured attraction in quiet trade, as traders took the opportunity to reduce some risks heading into the weekend, floor sources added.

 

Market bulls have recently been beating the drums of production concerns for the European Union and the Southern Hemisphere, as well as the demand needs of India and Iraq, but wheat is a demand-driven market and with export indicators weak, the market was a little overbought, Hannagan added.

 

In addition, rains are replenishing moisture in the southern Plains, leaving the market without fresh supportive inputs to maintain a bullish stance heading into an extended holiday weekend.

 

U.S. wheat futures markets will be closed Monday in observance of the Labor Day holiday.

 

Meanwhile, the DTN Meteorlogix forecast said moisture from Hurricane John in the Baja California peninsula will work northward into the southern Plains, bringing a good outlook for rainfall across the region during the next three days. Rains have fallen in southwestern Kansas, up to 1 1/2 inches. Similar rainfall is in store through Monday. This is a significant rainfall pattern, which will further enhance soil moisture prospects for winter wheat when it is planted this fall, Meteorlogix reports.

 

In Argentina, a new round of frost and freezing conditions threatens to move into the region from Sunday through Tuesday of next week. This cold-air pattern could be a frost/freeze producer across the entire winter wheat belt, calling for attention to its impact on the crop during its final stages, Meteorlogix said in its forecast.

 

In CBOT pit trades, Calyon Financial and JP Morgan each bought 300 December, O'Connor bought 500 December, and Man Financial bought 400 December and 400 July. Sellers were widely scattered among various commission houses.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures were the downside leader of the U.S. wheat complex, pressured by speculative profit-taking and a technical correction from prior gains. Decent early volume was reported, but once the opening orders were exhausted, paper dried up and left locals to push and pull the market, a KCBT floor trader said.

 

Man Financial, ADM Investor Services and UBS Securities were buyers on the day. Prudential Financial and FIMAT Futures were key sellers.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat ended lower in tune with other U.S. wheat markets. MGE traders said the market was a follower of Chicago and Kansas City, with prices taking a step back following month-end positioning that goosed prices higher over the past three trading sessions.

 

Overall activity was light, with some early country selling reported.