November 22, 2006

 

US Wheat Review on Tuesday: Ends mostly higher on lack of selling

 

 

U.S. wheat futures ended mostly higher Tuesday with a lack of selling interest serving as a key factor in upside gains, sources said.

 

December Chicago Board of Trade wheat closed 4 3/4 cents higher at US$4.79 3/4 per bushel, December Kansas City Board of Trade wheat settled 1/4 cent lower at US$5.14 3/4, and December Minneapolis Grain Exchange wheat ended 3 1/2 cents higher at US$4.99 1/2.

 

March CBOT wheat ended 8 cents higher at US$5.01 3/4 per bushel, March KCBT wheat closed 3 1/2 cents up at US$5.31, and March MGE wheat closed 3 1/4 cents higher at US$5.14 1/4.

 

Traders didn't want to take new risks ahead of the Thanksgiving holiday, sources said. Tuesday was the final full day of trading at CBOT this week as the exchange is slated to be closed Thursday for Thanksgiving and to close at 1 p.m. EST Wednesday and Friday.

 

"We were up on a lack of selling more than anything else," a CBOT floor trader said.

 

There also was little fresh fundamental news out to spark aggressive trading, a CBOT floor source added. Still, there was some technical fund buying and light speculative interest, he said.

 

CBOT December wheat options expired Tuesday, the source noted.

 

In CBOT pit trades, Citigroup bought 800 March. Tenco spread 500 December/March. Funds bought 1,200.

 

Bulls were feeding off concerns about dryness stressing winter wheat crops in the U.S. Southern Plains and in China's Shandong province, sources said.

 

In China, the main winter wheat growing provinces of Shandong and Henan have been dry for most of the season and will see only light, scattered showers during the rest of the week, the DTN Meteorlogix weather firm said. Poor soil moisture has left crops there in substandard condition, the firm said.

 

Meteorlogix said the U.S. Southern Plains states will have dry and very warm weather in the next five to seven days that will extend stressful conditions for crops.

 

In Kansas, the country's top wheat-producing state, topsoil moisture now rates 54% short to very short, and subsoil moisture is rated 71% short to very short, the weather firm said. A year ago, the Kansas soil moisture ratings had topsoil at 47% short to very short, and subsoil rated 48% short to very short.

 

But Sid Love, a market analyst with Kropf & Love Consulting, said it was too early to worry about the impact of the weather on the quality of the crops.

 

"The conditions in the fall don't have as much to do with it as the conditions in the spring do," Love said. "All we need is a couple of rains and a couple of snowstorms."

 

The pace of U.S. export sales this year, meanwhile, is considered bearish and disappointing amid tightened global supplies, sources said.

 

Weekly U.S. wheat export inspections for the week ended Nov. 16 were 14.464 million bushels, above the 12.383 million inspected a week earlier, the U.S. Department of Agriculture reported. In the current market year to date, however, the USDA said it had inspected 387.801 million bushels of U.S. wheat for export, down from 472.647 million bushels at the same point last market year.

 

"Our export sales and our exports of wheat have been kind of slow," Love said.

 

  

Kansas City Board of Trade

 

KCBT wheat futures rallied a bit near the end of the day session off higher prices at CBOT, a KCBT floor source said. There was a general lack of selling interest, she said.

 

There was some December/March spreading, she said.

 

"It was pretty much a holiday market, kind of quiet," she said. "There really wasn't much as far as volume goes here."

 

KCBT December wheat options expire Friday, a source noted.

 

  

Minneapolis Grain Exchange

 

Trading was mostly quiet at MGE during the day session, a floor source said. Trade in the December/March spread was active with Man Financial spreading 800 December/March, he said.

 

There was some inter-market selling against CBOT and KCBT, he said.

 

"It was pretty quiet here," he said.