September 16, 2006

 

US Wheat Review on Friday: Up; bouncing back from recent declines

 

 

U.S. wheat futures ended higher across the board Friday, climbing on technically inspired buying following the market's string of recent losses.

 

December CBOT wheat ended 2 cents higher at US$3.92 1/2, December KCBT wheat settled 3 1/2 cents higher at US$4.62 1/2, and December MGE wheat finished 2 cents higher at US$4.42 1/4.

 

The markets' gains were tied to a technical move with a little fundamental bias behind it amid ideas recent price weakness may attract export business over the weekend, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

Futures initially stumbled lower on follow-through selling following a series of losses this week. Wheat futures were able to press to new-move lows, before a lack of conviction on the sell side on the market opened the door for shorts to take some profits, McCambridge added.

 

Active contracts in Chicago sank to three-week lows, Kansas City wheat dropped to four-week lows and Minneapolis wheat stumbled to four-month lows before bouncing higher.

 

Optimistic hopes of fresh demand arising from the week's declines, with talk of Egyptian rumors, speculation surrounding Iraq's intentions to buy U.S. wheat amid a visit by the Iraqi Grain Board next week in the U.S. aided the pre-weekend advances, traders said.

 

Meanwhile, technical weakness still exists and until fresh demand is confirmed, upside movement will be hard to sustain, said a CBOT trader. Beneficial rains in the winter wheat belt are seen as a feature that continues to generate bearish thoughts, he added.

 

The DTN Meteorlogix forecast calls for showers and thunderstorms with rainfall of one-quarter to three-quarters of an inch in the western Midwest and the southwest Plains on Saturday, then spreading east during the weekend through early next week. The showers that develop will provide additional soil moisture for the newly-planted 2006-07 winter wheat crop.

 

In Australia, showers during the next seven days will be light and confined to the southern areas of West Australia and the state of Victoria. South Australia, New South Wales and southern Queensland will have very warm temperatures.

 

In CBOT pit trades, Fimat bought 1,500 December, and Rand Financial bought 400 March. Man Financial sold 800 December, and Fimat sold 500 December. Speculative fund buying was estimated at 1,000 contracts.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures climbed in step with Chicago wheat, managing to shake off a lower opening to finish higher. Light follow-through selling pressure from Thursday weighed on futures initially, but once the selling was exhausted futures staged a light-volume short coving bounce, traders said.

 

In pit trades, Fimat Futures, ADM Investor Services, and UBS Securities were featured buyers and sellers, with Country Hedging a key buyer on the day

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended higher in step with the rest of the U.S. wheat complex. The market rallied in response to other markets, with advances extended amid the absence of sell orders to offset the moderate buying interest, traders said.