November 3, 2005

 

US Wheat Review on Wednesday: Stumbles, lacked supportive inputs

 

 

U.S. wheat futures stumbled lower Wednesday, extending their defensive theme on speculative selling, as the lack of supportive fundamental inputs coming into the market kept buyers on the sidelines, analysts said.

 

CBOT December wheat futures ended down 4 cents at US$3.13; December Kansas City wheat settled 8 1/4 cents lower at US$3.60 1/2; and Minneapolis December wheat ended 3 cents per bushel lower at US$3.65 1/2.

 

The market continued its corrective measures Wednesday, with Chicago December wheat setting a new contract low while Kansas City and Minneapolis wheat set new lows for the current move, said Shawn McCambridge, senior grains analyst at Prudential Financial in Chicago.

 

The spreads between Chicago, Kansas City and Minneapolis futures narrowed, with traders saying the market needs to generate more demand in the export sector to break the lower trend.

 

However, with fresh supplies from Argentina and Australia getting ready to come into the market, buyers have no reason to chase prices higher, added McCambridge.

 

Market rumblings that the previously reported sale of hard red winter wheat to Iraq was not finalized and may be for 700,000 to 800,000 tonnes instead of the 1 million metric tonnes expected added to traders' bearish perceptions on prices.

 

The real concern for the market is that there is nothing really out there on the export radar beyond talk of Iraq business, said McCambridge.

 

CBOT Dec soft red wheat set a new contract low following the lead of Kansas City wheat, with technical selling triggering sell-stop orders.

 

On tap for Thursday, the weekly export sales report from the U.S. Department of Agriculture is scheduled to be released at 7:30 a.m. CST. Analysts look for commitments in a range of 400,000 to 1,400,000 metric tonnes. The wide range takes into account the potential for sales to Iraq to be counted in this report, analysts said.

 

In CBOT pit trades, Fimat, and Iowa Grain each bought 300 December, and Goldenberg Hehmeyer bought 200 December. Fimat sold 400 December, with Prudential Financial and Shatkin/Arbor each selling 500 December. Commodity fund selling was measured at 2,000 lots.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures led the wheat market's demise Wednesday, falling to their lowest levels since Sept. 21. Technical selling and spread liquidation were featured attractions, with December futures satisfying a near-term objective of filling a gap on charts between US$3.61 and US$3.61 1/2. The market continued to correct from previous gains.

 

With the pace of export sales slowing, traders see downward movement as the path of least resistance, analysts said.

 

ADM Investor Services sold 1,000 December, and Refco Investor Services sold 1,000 December and 500 March. Man Financial sold 3,500 December, Prudential sold 800 December, and Refco sold 400 December and 700 March.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures fell in unison with the rest of the U.S. wheat complex, with the nearby December futures sliding to a week low. Spread liquidation, technical weakness and sluggish export demand served as the catalysts to sideline buyers, traders said.