November 1, 2007

 

US Wheat Review on Wednesday: Lower; lacks fresh fundamental support

 

 

U.S. wheat futures ended a consolidative two-sided day lower Wednesday, unable to feed off the bullish influence of higher outside markets.

 

December CBOT wheat ended 6 cents lower at US$8.08, December KCBT wheat settled 5 cents lower at US$8.32, and December MGE wheat finished 3 cents lower at US$8.34.

 

The market had no clear direction, lacking fresh fundamental demand support to provide a definitive path for futures, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

Wheat finished lower on a day on which December light, sweet crude oil settled at US$94.53 a barrel on the New York Mercantile Exchange. The wheat market doesn't have the same connection to crude oil as corn and soybeans, so the market consolidated in the absence of fresh export sales to justify current price levels, he added.

 

Nevertheless, surging outside inflationary markets and spillover from neighboring grains did provide some psychological support to boost prices during the day, traders said. However, a lack of clarity surrounding potential export demand failed to provide the fundamental strength to keep prices underpinned down the stretch, analysts added.

 

Meanwhile, good technical support and some signs of exhausted selling pressure managed to limit losses, with traders looking toward Thursday's weekly export sales to see whether the market still has aggressive buyers or prices need to come down to attract fresh business, McCambridge added.

 

On tap for Thursday, U.S. Department of Agriculture is scheduled to release weekly export sales figures for the week ended Oct. 25 at 8:30 a.m. EDT. Trade estimates put wheat export sales at 600,000 to 900,000 metric tonnes.

 

In CBOT pit trades, JP Morgan bought 500 March and UBS securities bought 300 December, Tenco sold 300 September, and MF Global and Rand Financial each sold 500 December. Speculative fund selling was estimated at 3,000 lots.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures ended lower, backpedaling after testing either side of unchanged levels during the day. The absence of fresh fundamental news kept the market in a choppy mode, with activity reported fairly light, KCBT traders said. Selling from Fimat kept the market from rallying with a midday bounce in Chicago wheat, he added.

 

Fimat sold 800 December, and JP Morgan bought 500 December and sold 300 December.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended lower as well, chopping around in light-volume trade, a MGE floor broker said. The market did receive some month-end fund buying, but a general lack of buying failed to sustain the advances, traders said. Mild pressure on the front end of the market was exerted from traders beginning to roll December futures, traders added.

 

Spreads volumes were estimated in the 500- to 1,000-lot range.