US Wheat Review on Tuesday: Corrects lower on profit-taking pressure

 

 

U.S. wheat futures ended sharply lower Tuesday, continuing to retreat from last week's gains on profit-taking pressure.

 

December CBOT wheat ended 23 3/4 cents lower at US$5.03 1/4, December KCBT wheat settled 20 1/2 cents lower at US$5.10 1/2, and December MGE wheat finished 19 1/4 cents lower at US$5.26 1/2.

 

In CBOT pit trades, speculative fund selling was estimated at 5,000 lots.

 

The market effectively took some unwarranted gains out, experiencing an overdue correction, said Shawn McCambridge, senior grains analyst with Prudential Bache in Chicago.

 

Futures initially tried to regain some upward momentum, but after buying failed to sustain the opening advances, it signaled to traders that the correction that began Monday will continue, McCambridge said.

 

Concerns about the slow pace of export demand and the absence of clear support from outside financial markets left futures without a crutch to sustain higher price levels.

 

"The recent run-up in prices did not have fundamental support, but the downside move had the backing of slow demand to justify the declines," McCambridge said.

 

Mild support was generated from concerns about slow soft red winter wheat planting, but the trade viewed this as a new crop issue that will take time to develop, leaving futures with little strength to stand on, traders said.

 

Wet weather and a delayed U.S. soy harvest have slowed plantings of soft red winter wheat, traded at the CBOT.

 

CBOT Dec wheat had rallied over US$1.00 a bushel from Oct. 5 to Friday's settlement. Monday and Tuesday's combined losses of 44 1/2 cents showed last week's short-covering rally was complete, traders added.

 

The DTN Meteorlogix weather forecast said southern Plains wheat areas will have moderate to heavy thunderstorms during the next couple of days, some with strong winds or locally severe weather. Wet weather delays field work and planting.

 

 

Kansa City Board of Trade

 

KCBT wheat futures ended lower across the board, succumbing to speculative led selling. The absence of fresh supportive fundamental news, with a lack of planting worries for the hard red winter wheat crop opened the door for corrective sales to continue, analysts said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures ended lower, falling in line with the rest of the U.S. wheat complex. Technically inspired selling and corrective sales from previous gains provided an opportunity for traders to book some profits, traders said.