October 31, 2006

 

US Wheat Review on Monday: Prices close weaker on export inspections

 

 

New, lower-than-expected government export inspection figures dragged U.S. wheat futures to a weaker close Monday, sources said.

 

There also was some liquidation of December long contracts and a lack of bullish news to support prices, sources said.

 

December Chicago Board of Trade wheat ended down 7 1/2 cents at US$5.01, December Kansas City Board of Trade settled 6 1/4 cents lower at US$5.24 1/2, and December Minneapolis Grain Exchange wheat closed 2 1/2 cents lower at US$5.05 1/2.

 

"There's no new export news," said Chad Henderson of Prime Agricultural Consultants. "Export inspections are a little disappointing."

 

Export inspections of U.S. wheat totaled 11.692 million bushels for the week ended Oct. 26, the U.S. Department of Agriculture reported. That is below the 15 million to 21 million bushels expected by analysts and below the 14.638 inspected last week.

 

For the current market year to date, the USDA said export inspections totaled 347.727 million, down from 421.547 million last year.

 

The figures were particularly disappointing, analysts said, because they come as Australia is suffering from a severe drought that has slashed production forecasts there.

 

"We're not doing much export business," one CBOT floor trader said. "I think the low numbers were enough to bring us down today."

 

CBOT funds, meanwhile, boosted their net long wheat futures and options by 45,529 contracts in the week ending Oct. 24, the Commodity Futures Trading Commission said. CBOT funds cut shorts 1,958 and lifted longs by 2,234 contracts.

 

A CBOT floor source said traders were liquidating December wheat contracts in anticipation of the contract's approaching close.

 

"The expiration's coming up," the source said.

 

In other news, India's cabinet approved a hike in 2007 intervention wheat prices that was higher than recommendations from the country's top farm pricing regulator. The country's wheat imports in 2007 will depend on what the government buys from farmers at the intervention price.

 

 

Kansas City Board of Trade

 

KCBT competed with CBOT for the downside during the day session. A KCBT floor source said disappointment over the export inspection numbers and liquidation of December contracts pushed prices down.

 

He added that bearish weather conditions in the U.S. plains also pressured prices. Aside from some areas of Kansas, he said other growing areas are in "pretty good shape."

 

The source said trade was light during the day session.

 

"It's very, very light trade," he said. "It continues to be very, very volatile."

 

 

Minneapolis Grain Exchange

 

A MGE floor source said there was some "thin, technical sell-off" at CBOT but not much trade action at MGE. He said he thought most traders were expecting the USDA export numbers to be low.

 

"The exports are certainly light," he said, "but I don't think anybody was expecting to see much above that."

 

In other news, the Canadian Wheat Board said initial payments for wheat and durum during the 2006-07 crop year will be increased on Nov. 2.

 

The increase in initial payments for wheat will be CUS$11.05 to CUS$17.50 per metric tonne, depending upon the grade and class. In the case of durum, the increase will be CUS$17.50 to CUS$25.50 per tonne.

 

The CWB said initial payments are set in relation to world prices.