November 14, 2006

 

US Wheat Review on Monday: Lower on weaker corn close

 

 

U.S. wheat futures closed lower Monday as support from stronger corn prices eroded amid a lack of fresh fundamental news, sources said.

 

Bearish concerns about slow export sales and expectations for a larger wheat crop next year also helped push prices lower, analysts said.

 

December Chicago Board of Trade wheat settled 3 1/2 cents weaker at US$4.77 per bushel, December Kansas City Board of Trade wheat ended 1/4 cent down at US$5.08 1/2, and December Minneapolis Grain Exchange wheat settled 3 1/4 cents lower at US$4.94.

 

Stronger corn prices had helped wheat futures hold modest gains throughout much of the day session until corn hit a late price break, said Bill Bayer, partner with PTI Securities.

 

"The break in corn certainly didn't help the price action in the wheat today," Bayer said.

 

Aside from neighboring corn prices, bulls had little else to feed on during the day session, CBOT floor sources said. There was no fresh supportive news out Monday or during the weekend, sources said.

 

Export business, for one, continues to lag behind last year's sales.

 

Export inspections of U.S. wheat for the week ended Nov. 9 were 10.491 million bushels, the U.S. Department of Agriculture reported. The inspections were on the low side of traders' expectations of 10 million and 20 million bushels.

 

For the current market year to date, 369.150 million bushels of U.S. wheat have been inspected for export, down from 456.069 million bushels at this time last market year, the USDA said.

 

"Coming into today, you've got a lack of new export news, which is not terribly supportive to the price," Bayer said.

 

High wheat prices also have encouraged growers to plant more wheat next year, a bearish development in the short term, a CBOT floor analyst said.

 

Some support for wheat was seen early from buyers looking to take advantage of lower closes on Thursday and Friday, the analyst said.

 

A floor trader added that dry weather forecasts for U.S. southern Plains winter wheat growing regions also were slightly bullish. The most intense areas for dry weather are in northern and western Oklahoma, west Texas, and southwest Kansas, DTN Meteorlogix said.

 

Fall weather forecasts would not normally influence futures prices but that they were seen as somewhat supportive in the absence of other tangible news, an analyst said.

 

 

Kansas City Board of Trade

 

Trading at KCBT was "brutally quiet," a floor source said. Wheat saw support from corn and a slight correction from losses seen Thursday and Friday, he said.

 

"Every time corn wanted to tick up, we wanted to follow and be higher," he said.

 

December contracts are rolling over to March, he said.

 

Weather in the southern Plains should not be seen as particularly bullish, he noted.

 

"We really can't start talking about something like that until the end of February," he said.

 

 

Minneapolis Grain Exchange

 

Trading was light during Monday's day session and driven mostly by CBOT corn action, a MGE floor source said.

 

"Chicago gave us the general direction, Chicago corn basically," he said.

 

MGE December wheat traded lower during the early day session as CBOT December wheat and KCBT December wheat posted gains. The source said MGE buyers have learned from recent volatile market movements not to chase prices higher.

 

"I think our buyers have become pretty patient and we will price orders below the market as opposed to chase them higher," he said.