September 25, 2007

 

US Wheat Review on Monday: Climbs on Australian crop concerns; demand

 

 

U.S. wheat futures ended higher across the board Monday, as lingering worries over Australian wheat production coupled with the need to ration global demand provided support to underpin prices.

 

December CBOT wheat ended 3 3/4 cents higher at US$8.77 3/4, December KCBT wheat settled 6 3/4 cents higher at US$8.64 3/4, and December MGE wheat finished 6 1/2 cents higher at US$8.32 1/2.

 

The market is still looking at uncertain Australian production forecasts amid dryness issues, with reports of fresh demand from Iraq serving as the catalyst to support the day's price strength, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

However, the inability of futures to extend the early gains attracted profit taking pressure with moderate-size orders able to pull futures well off their highs as volumes remained thin, traders said.

 

The market remains encouraged by the prospects of Australian production losses and fresh demand, but without confirmation of new features that will change the world and domestic balance sheet, it's hard to attract aggressive buyers near the highs, McCambridge added.

 

Nevertheless, the market remains in a bullish trend, but without fresh concrete fundamental inputs, a choppy tonnee is expected to ensue with traders eyeing the inflationary impacts of outside markets, analysts added.

 

CBOT wheat rallied to two-week highs before succumbing to profit taking pressures, traders said.

 

The DTN Meteorlogix Weather Forecasts said Australia's major wheat areas remained dry during the past weekend. This week offers a continuation of this stressful situation. Only light showers in the west Monday and in the southeast during Tuesday or Wednesday are forecast. Otherwise, dry weather remains the main feature during the next week. Crop losses will increase as the crop moves through its critical heading stage during the next few weeks.

 

In CBOT pit trades, buyers and sellers were lightly scattered among various commission houses, with speculative funds estimated buyers of 1,000 lots.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures rose on Australian dryness concerns and Iraqi business potential, analysts said. Overall trade, however, was relatively thin, with the December/March spread featured. The spread opened wider at 2 to 3 cents and lightly traded down to 1 to 1 1/2 cents by the close, traders said. Other than that, commercials were light buyers on the day.

 

Meanwhile, analysts said some cautionary notes were taken from Monday's trade, with the inability of the December future to take out the old contract high of US$8.80 suggesting the market may have established the upper end of a new trading range, a KCBT floor analyst said.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended higher, up in unison with the rest of the U.S. wheat complex. Overall activity was very light, traders said, with air pockets of volume allowing for wide price moves to occur in a short period. Light buying of MGE wheat versus Chicago wheat was reported, but with all the wheat markets moving in unison, there were not a lot of opportunities for futures commission merchants to work the spread, a MGX floor broker said.