November 20, 2007

 

US Wheat Review on Monday: End firm; consolidates prior losses

 

 

U.S. wheat ended higher across the board Monday, consolidating prior losses, with technical buying, export demand and weather issues for the southern Plains and Argentina providing fundamental support.

 

December CBOT wheat ended 6 3/4 cents higher at US$7.56 1/4, December KCBT wheat settled 6 3/4 cents higher at US$7.81, and December MGE wheat finished 6 cents higher at US$8.32.

 

The market was looking for a reason to uncover some shorts, and concerns over a weekend frost in Argentina, dryness in the southern hard red winter wheat belt and outlooks for crop ratings to decline provided a psychological boost to the market, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

The market is poised to continue a near-term consolidation after a US$2.00 break in prices from late September, and with the market unable to put in a new low since the week before last week, traders took the opportunity to cover some shorts, Hannagan added.

 

Meanwhile, news of fresh export interest provided underlying support as well, with traders unwilling to sell as concerns over emerged HRW crops facing drier-than-normal weather conditions before dormancy kept a floor under the market, analysts added.

 

The DTN Meteorlogix Weather forecast said dryness continues to stress wheat growth through the western half of the southern Plains winter wheat belt. There is little chance for significant rainfall in this area during the week. Colder weather arrives later this week, slowing growth of the wheat crop. Jordan's Ministry of Trade and Industry said Monday it bought 85,000 metric tonnes of hard wheat in a tender, on a cost and freight basis.

 

Frost across the central and southern areas of Argentina's grain belt caused limited damage to the developing wheat crop, but isn't likely to significantly affect production, the Buenos Aires Cereals Exchange said in its weekly crop report Monday.

 

Export inspections of U.S. wheat totaled 23.948 million bushels for the week ended Nov. 15, the U.S. Department of Agriculture reported, near the bottom end of the 19-31 million bushels forecast by analysts but slightly higher than the 23.419 million inspected the previous week. Year-to-date, wheat inspected for export is up 70.9% above the level reached last year.

 

After the close, the USDA is scheduled to release its weekly crop progress report at 4 p.m. EST. Analysts anticipate the U.S. heard red winter wheat crop ratings will decline once again.

 

In CBOT pit trades, buyers and sellers were lightly scattered among various commission houses. Speculative fund buying was estimated at 2,000 lots.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures ended higher across the board, maintaining a strong price theme in quiet trade, floor analysts said.

 

MF Global was the largest market participant on the day, buying 300 to 400 of December, March and May contracts each. Otherwise, the December/March spread was featured, trading between 12 1/2 and 12 3/4 cents.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended higher, mostly following the lead of Chicago and Kansas City wheat futures, analysts said. Overall activity was thin, with profit taking in December contracts and liquidation of long Minneapolis short Chicago spreads featured attractions, a MGE floor analyst said.