November 21, 2007

 

US Wheat Review on Tuesday: Soars on outside market strength, technical buying

 

 

U.S. wheat futures soared Tuesday, continuing to consolidate recent losses on technical buying and spillover support from soybeans and outside market influences.

 

December CBOT wheat ended 17 1/4 cents higher at US$7.73 1/2, December KCBT wheat settled 19 1/4 cents higher at US$8.00 1/4, and December MGE wheat finished 26 cents higher at US$8.58.

 

The market has been oversold for a while, and with selling interest seemingly exhausted, futures settled into a consolidative theme until it determines if demand has been generated or not, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

The market attempted to push prices lower initially, and its inability to challenge Monday's lows served as a signal that selling was exhausted, McCambridge added.

 

Overall activity was light in thin holiday action, as traders took the opportunity to square up a few positions heading the abbreviated trading sessions for the remainder of the week, analysts added.

 

Meanwhile, new crop contracts received modest support from declining crop ratings, as dryness continues to pressure crop development in the southern winter wheat belt, analysts said. The DTN Meteorlogix Weather forecast said the end of this week features the first winter storm system of the season in the far southern Plains and Texas Panhandle region. This storm will bear close monitoring for the potential of bringing several inches of snow and strong winds to Southern Plains wheat and livestock areas.

 

In Argentina, showers will benefit both row crops and winter wheat. Wheat areas need rain after recent stress brought on by a couple nights of unseasonably cold weather last week.

 

In other news, Argentina exported 116,428 metric tonnes of wheat in September, down 77% from the 497,121 tonnes shipped during the same month a year earlier, the latest Agriculture Secretariat data show. Brazil was by far the leading importer of Argentine wheat in September, purchasing 105,550 tonnes.

 

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

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures ended higher, buoyed by the combination of sharply higher outside markets and declining crop ratings, analysts said. The new crop KCBT wheat futures garnered support from ratings declines, as crop conditions in the big three states of Kansas, Oklahoma and Texas continue to struggle, McCambridge said.

 

Otherwise, technically based buying was featured, as the market continues to correct off last weeks lows, a KCBT floor broker said. Active trade in the December/March spread was featured as well, with the spreading winding out to 15 cents before settling at 14 1/2 cents, he added.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended higher in step with the gains in other wheat futures. Light hedge pressure was reported early, but end user buying later in the day helped lift futures to session highs. Traders said there was decent amount of spread trade, with the liquidation of December contracts featured as well as options related buying, traders added.