October 27, 2006

 

US Wheat Review on Thursday: Weaker close on follow-through selling

 

 

U.S. wheat futures closed lower Thursday on bearish pressure from Wednesday's weaker close and ideas that sales figures need a boost, analysts said.

 

Profit taking further pressured prices, sources said.

 

December Chicago Board of Trade wheat settled 9 1/4 cents down at US$5.07 1/2 per bushel, December Kansas City Board of Trade closed 5 1/4 cents lower at US$5.30 1/4, and December Minneapolis Grain Exchange wheat ended 6 3/4 cents lower at US$5.06 3/4.

 

Wheat settled lower Wednesday after prices made strong gains earlier in the day.

 

"Certainly we're under some technical pressure under yesterday's reversal," said Allen Dever, a market analyst with Doane Agricultural Services.

 

On Thursday morning, the U.S. Department of Agriculture said net weekly wheat export sales for the week ended Oct. 19 were 460,800 metric tonnes, 4% above the previous week. The sales were 4% below the prior four-week average, but within trade estimates of 300,000 to 500,000 tonnes.

 

Total sales were down for the year.

 

Roy Huckabay, of The Linn Group, said wheat prices will likely stay under pressure until sales increase.

 

"We need to see some quantity," Huckabay said.

 

Recent rains in the U.S. Southern Plains also pressured prices, Dever said.

 

Showers on Wednesday brought up to 0.6 inch of rainfall, DTN Meteorlogix said. The private weather firm said Southern Plains wheat areas, notably Kansas, have a beneficial round of moisture coming during the next 24 to 48 hours. Rains of one-half to 1 1/2 inches will develop Thursday through early Friday over central and southern Colorado, central and southern Kansas, and in northern Oklahoma.

 

"This is an area of the Plains wheat country still in need of additional soil moisture, so the rains will be very timely for the wheat crop," Meteorlogix said.

 

Huckabay noted, however, that rains have prevented planting in soft wheat growing areas, a bullish development.

 

"It's a mixed blessing," he said about the rains.

 

Dever added bulls continue to see support from tightened global supplies, particularly out of drought-stricken Australia. He said stronger U.S. corn prices helped to keep wheat sellers "pretty cautious."

 

"The market is a little reluctant to commit to the downside," he said.

 

 

Kansas City Board of Trade

 

A KCBT floor source said traders saw follow-through selling on Wednesday's weaker close.

 

"We just continued some of yesterday's weakness and then chopped around," he said. "I think there's kind of a general feeling that (wheat) has lost a little bit of its luster for the time being. We're going to probably chop around and try to consolidate."

 

He said the USDA export sales were in line.

 

 

Minneapolis Grain Exchange

 

MGE prices followed CBOT downward, pressured by Wednesday's low close, a MGE floor source said. He said trading was choppy.

 

"Funds were quiet here," he said. "Our volume continues to be kind of thin and painful."