October 3, 2006

 

US Wheat Review on Monday: Up, fails to hold early highs

 

 

U.S. wheat futures ended higher Monday, but well off early highs as the lack of any significant news to extend early gains attracted profit- taking pressure.

 

December Chicago Board of Trade wheat ended 3 cents higher at US$4.46, December Kansas City Board of Trade wheat settled 2 cents higher at US$4.98, and December Minneapolis Grain Exchange wheat finished 5 3/4 cents higher at US$4.74 1/2.

 

Technically motivated buying boosted futures higher in early action, but after early buys were exhausted, participants booked some profits, particularly in the absence of fresh export news to solidify the gains, said Jack Scoville, analyst with the Price Futures Group in Chicago.

 

The market was thinly traded after the early spike higher, with speculative buying drying up and a quiet news front providing little incentive to boost futures further, said a CBOT commission house broker.

 

Traders said the lack of participation was partly attributed to the Yom Kippur holiday.

 

The early price strength propelled December CBOT wheat to a 4-month high as spillover from higher prices overnight based on stronger European Union wheat prices boosted futures, traders said. However, they said there was no additional buying push after this morning's runup, with light commercial and farmer selling emerging to trim advances as well.

 

Meanwhile, the DTN Meteorlogix forecast said any showers in Australia's major wheat areas during the next seven days will be light and confined to either West Australia or Victoria. There is no relief for the stressed wheat crop, Meteorlogix reported. In Argentina's major wheat belt, showers and thunderstorms Monday through Wednesday promise up to one and one-half inch of rain, favorable for wheat.

 

In CBOT pit trades, Citigroup bought 1,000 December, Man Financial bought 500 December and Fimat bought 300 December. Sellers were scattered among various commission houses, with FCStonnee a featured seller of 600 December. Speculative fund buying was estimated at 2,000 contracts. In options trade, FCStonnee sold 2,000 December US$4.20 calls.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat ended modestly higher, trimming early gains after speculative led buying was exhausted, traders said. Spillover strength from Chicago wheat led futures to strong early gains, but without confirmation of any fresh export news, futures were unable to justify the early price strength, KCBT traders said.

 

Man Financial, Prudential Financial, UBS Securities and ADM Investor Services were featured players.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended higher, taking on the familiar role of follower to other U.S. wheat markets. Without the technically based trade that Chicago has and a quiet news front, futures were whipsawed at the mercy of CBOT and KCBT futures, said a MGE trader. Light intermarket spreading was reported along with some producer selling, floor traders added.