September 6, 2006

 

US Wheat Review on Tuesday: Ends mixed; fails to hold early gains

 

 

U.S. wheat futures ended mixed Tuesday, scaling back prior gains as overbought conditions and a lack of follow-through buying uncovered late profit taking pressure.

 

December CBOT wheat ended 2 1/2 cents higher at US$4.22, December KCBT wheat settled 1 1/2 cents lower at US$4.83 1/2, and December MGE wheat finished 3/4 cents lower at US$4.69 3/4.

 

The market initially rekindled the positive momentum that put value on the market, benefiting from weekend export business, but without additional fundamental support, futures failed to sustain the bullish tonnee down the stretch, analysts said.

 

The market staged a minor correction from its recent run from prior lows, as the exhaustion of speculative buying and short covering attracted selling pressure as the session drew to a close, traders said.

 

CBOT wheat continued to attract short covering interest, as speculative shorts loosen positions amid signs that end-users are beginning to cover needs, as they become more concerned about tightening world balance-sheet projections, analysts added.

 

However, analysts say the market's upside movement may have run its course, opening the door for a minor correction from overbought conditions follow a pretty good run for mid-August lows, said a CBOT commission house broker.

 

Meanwhile, the DTN Meteorlogix forecast said recent rainfall in the Southern Plains - including thunderstorms in northern Texas - has added soil moisture to benefit winter wheat germination and early development; even so, more rain is still needed. Dry weather will be common to start off the week, but rain may be in store later in the week, dominated by temperatures near to below normal.

 

Australia wheat areas might have a chance of relief from a dry August, and there is a chance of rainfall in the eastern belt this week, Meteorlogix forecasts.

 

In CBOT pit trades, buyers widely scattered among various commission houses, with speculative funds estimated net buyers on the day. ABN Amro was a seller of 3,000 December and UBS Securities was a seller of 2,000 December.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat ended on the defensive, backpedaling from earlier gains in quiet trade, as the market ran out of significant buying down the stretch, KCBT traders said.

 

In pit trades, FCStonnee bought 500 December and sold 300 December, Frontier Futures sold 300 December, and ADM Investor Services bought 500 December, with Man Financial a buyer and seller of 300 December. Prudential Financial was a buyer of 400 December and 400 July, UBS bought 500 December and sold 500 March. JP Morgan bought 300 December and 300 March.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat ended lower, setting back in unison with the late drop in KCBT wheat. The market was a follower on winter wheat markets Tuesday, with limited commercial buying and country selling keeping activity fairly light, a MGE trader said.