November 24, 2007

 

US Wheat Review on Friday: Rally on demand, technical buys; lacked sellers

 

 

U.S. wheat futures rallied once again, briefly propelling to daily upper trading limits on a lack of sellers, supportive demand and technically inspired commission house buying.

 

March CBOT wheat ended 19 1/2 cents higher at US$8.45 1/2, March KCBT wheat settled 19 cents higher at US$8.64 1/4, and March MGE wheat finished 15 3/4 cents higher at US$8.90.

 

The bullish theme was consistent, with weekly export sales at the high end of estimates and buying from India providing fundamental support, analysts said. Although the Indian purchase isn't expected to include any amount from the U.S., it is positive as it illustrates world wheat demand, analysts added.

 

Spillover support from soybeans and a bounce in outside inflationary markets sparked additional buying to extend the advances, traders said. A lack of offers in thin post-holiday trade opened the door for the push to limit-up levels, with commission buying from Fortis in Chicago and pre-placed buy stop orders catapulting prices to limit-up levels, traders added.

 

Meanwhile, lingering concerns over dryness issues in the southern winter wheat belt provided mild underlying support.

 

However, once the buying was exhausted, profit-taking surfaced to trim advances down the stretch, a pit trader said.

 

In demand news, U.S. weekly wheat export sales were 510,500 metric tonnes for the week ended Friday, above analysts' expectations of 300,000 to 500,000 tonnes. Included in the total were sales of 18,700 tonnes for delivery in the 2008-09 marketing year. Total commitments of 27.5 million metric tonnes are 92% above this time last year, the U.S. Department of Agriculture reported.

 

Indian state-run trading firm MMTC Ltd. (513377.BY) will buy around 342,000 metric tonnes of optional origin wheat in its latest import tender, a senior government official said Friday. The wheat, which will be delivered by Feb. 10, will mostly be supplied by global trading companies Cargill and Glencore International, said the official who didn't wish to be identified.

 

The DTN Meteorlogix Weather forecast said winter wheat in the Central and Southern Plains could use some moisture, but little is expected across most of the region. Meteorlogix is forecasting up to three-quarters of an inch over the weekend in north-central Texas and south and east Oklahoma. But in the southwestern plains, where moisture is needed the most, no more than a quarter inch is expected.

 

In CBOT pit trades, buyers and sellers were scattered among various commission houses, with Fortis a featured buyer of 2,000 March. Speculative fund buying was estimated in a range of 2,000 to 3,000 lots.

 

 

Kansas City Board Of Trade

 

KCBT wheat futures ended higher, following the lead of Chicago, with traders saying the market lacked any significant selling to offset the run-up in prices.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures ended sharply higher, rallying in very thin trade, floor brokers said. Local buying was the driver of the gains, with no significant selling presence to get in the way of the buyers, they added. Nevertheless, volume was light with a lack of follow-through buying to sustain late gains attracting profit-taking, traders added.