November 13, 2007

 

US Wheat Review on Monday: Consolidates amid lack of bullish news

 

 

U.S. wheat futures settled mostly lower Monday amid pressure from softer outside markets and profit-taking, backpedaling from mid-session gains, traders said.

 

Chicago Board of Trade December wheat fell 1 cent to US$7.61 per bushel. Kansas City Board of Trade December wheat ended down 8 1/4 cents at US$7.76 1/2, and Minneapolis Grain Exchange December wheat slid 1 cent to US$8.17.

 

Setbacks in crude oil and precious metals weighed on the grains, with few fresh, bullish fundamentals to attract new buyers, traders said. Short covering temporarily pushed prices higher during the day session, but the markets pulled back before the close, they said.

 

"Fundamentally there isn't anything you want to get excited about at this point for wheat," an analyst said.

 

News that India's state-run MMTC Ltd. floated a wheat import tender for around 350,000 metric tonnes did not offer much of a boost because India is not expected to buy U.S. wheat, analysts said. There are also doubts about whether India will follow through on plans to buy the wheat, which would be used to beef up buffer stocks, they said.

 

Brokers expect Russia and Argentina will compete to provide the wheat, if India purchases grain. Argentina may benefit from Russia's new export duties, they said. As of Monday, all Russian wheat exports will incur a 10% export duty.

 

Aside from the Indian tender, the demand front was quiet for wheat during the weekend, a CBOT floor trader noted. The markets have been waiting for signs that export business is picking up.

 

The U.S. Department of Agriculture will release weekly export inspections and crop progress reports Tuesday. The reports, normally released Monday, were delayed a day due to the Veterans Day holiday.

 

The USDA's November supply/demand report, released Friday, was considered fundamentally bearish as it raised forecasts for world wheat stocks and production. The market may have felt some lingering weakness from the report amid an absence of other news, a trader said.

 

Frost and freezing conditions are likely to cause some damage to mature wheat in some areas of Argentina, DTN Meteorlogix said. Rain in southeastern Australia over recent weeks may have been a boon to wheat, and drier weather in upcoming days will improve conditions for mature wheat and the wheat harvest, the private weather firm said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures consolidated amid a lack of fresh news, a floor trader said. The weaker outside markets and quiet export front were bearish features, he added.

 

There was good support on breaks from fears about tight world supplies and unfavorable dryness in hard red winter growing areas of the U.S. Plains, the trader said. The market is expecting the USDA to lower condition ratings for Kansas in the crop progress report Tuesday due to the lack of rain, he said.

 

In the driest areas of the central and southern Plains, DTN Meteorlogix projects little rainfall during the next five to seven days. There is a slight chance for some shower activity late in the 10-day period, but any rainfall will be scattered and light, the firm said.

 

"Above-normal temperatures and lack of moisture will be stressful to the developing wheat crop," Meteorlogix said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures followed the outside markets and CBOT wheat during the day session, a MGE floor trader said. The market felt some underlying strength from concerns about tight spring wheat stocks, he added.

 

The trade is anxious for news of fresh export demand, the trader said. There was talk that Pakistan is expected to tender for more wheat Wednesday, he said.