October 24, 2006

 

US Wheat Review on Monday: Prices rebound to higher close

 

 

U.S wheat futures ended higher Monday in a recovery from low closes last week and on bullish speculation, analysts said.

 

Chicago Board of Trade December wheat closed up 12 cents to US$5.17 a bushel, Kansas City Board of Trade December ended up 11 1/4 cents at US$5.42 1/4, and Minneapolis Grain Exchange December wheat settled 8 1/2 cents higher at US$5.18 1/4.

 

Louise Gartner, an analyst with Spectrum Commodities, partly attributed the gains to a reversal from last week's pullback in prices.

 

"I haven't seen what other fundamentals it could be," she said when asked about the motivation behind Monday's firmer trading.

 

Doug Harper, an analyst with Brock Associates, said fund trading continued to push prices higher.

 

In CBOT pit trades, Fimat bought 800 December and Calyon bought 500 December. Fortis sold 500 December.

 

"I think we still have a heavy fund involvement," Harper said. "They just refuse to give up their bullish bias."

 

The U.S. Department of Agriculture on Monday said 14.66 million bushels of wheat were inspected for export for the week ended Oct. 19. That was below the 15 million to 20 million bushels expected by analysts surveyed by Dow Jones Newswires.

 

The export inspection figure was down 21.8% from the previous week's 18.735 million bushels.

 

"The export sales have been pretty weak," Gartner said.

 

Rumors that Iraq plans to buy several hundred thousand tonnes of wheat also may have supported prices, CBOT floor sources said. Traders said they had heard talk that Iraq may buy the wheat from optional origin sometime in the next week.

 

In other news, traders said ongoing concerns about the global wheat supply were on their minds. Australia, which has suffered a savage drought, this weekend received less rain than had been predicted.

 

Weather forecasts show dry growing areas of Ukraine and U.S. Southern Plains also may not get the moisture they need.

 

"There were reports out of Australia that they need more rain," Harper said. "That continues to be a supportive factor, but it's not really fresh news."

 

 

Kansas City Board of Trade

 

A KCBT floor source said wheat prices caught spillover momentum from higher corn and soybean prices. He said there were some traders buying KCBT and selling CBOT in spreads.

 

The source said there was fund buying late in the day but nothing new fundamentally to support prices. He said rumors about Iraq buying wheat have circulated for awhile.

 

"The question is when are they going to come and buy," the source said.

 

 

Minneapolis Grain Exchange

 

A MGE floor source said wheat prices followed CBOT upward. He said there was a lot of commercial interest in buying MGE and selling CBOT in spreads.

 

He agreed that there was no fresh fundamental news to boost prices.

 

As for the USDA export figures, the source said they did not have much impact on trading.

 

"I think it's widely known that we're well behind pace in general," he said.