November 28, 2006

 

US Wheat Review on Monday: Ends lower to correct Friday's gains

 

 

U.S. wheat futures tumbled lower Monday in a correction after strong gains Friday and with little fresh fundamental news to support higher prices, analysts said.

 

December Chicago Board of Trade wheat closed 9 3/4 cents lower at US$4.90 1/4 per bushel, December Kansas City Board of Trade wheat settled 3 cents weaker at US$5.18, and December Minneapolis Grain Exchange wheat ended 9 1/4 cents down at US$5.00 1/4.

 

March CBOT wheat ended 5 cents lower at US$5.14, March KCBT wheat closed 1 1/4 cents down at US$5.36 1/2, and March MGE wheat closed 6 1/2 cents lower at US$5.17.

 

At the close of Friday's day session, wheat futures were solidly firmer on fund buying and declines in the value of the U.S. dollar, sources said.

 

Wheat futures opened higher Monday but turned to the downside without follow-through buying, traders said. There also was long profit-taking, noted Dan Zwicker, senior analyst with AgriVisor Services

 

"I think everything is kind of a reaction to the market being a little overdone in Friday's session," Zwicker said.

 

The U.S. Department of Agriculture reported weekly U.S. wheat export inspection figures for the week ended Nov. 24 totaled 13.524 million bushels. The inspections were within analysts' estimates and not strong enough to support higher prices, sources said.

 

Inspections were lower than for the week ended Nov. 16, when the USDA reported 14.464 million bushels were inspected. For the current market year to date, 401.425 million bushels have been inspected for export, compared with 494.255 million bushels at this point last market year, the USDA said.

 

Traders were likely "looking for something a little bit stronger" from the inspections data, Zwicker said.

 

"When that came out, that didn't give it any fundamental support," he said. "I think it was good, but it was not good enough to keep things going higher."

 

In CBOT pit trades, Fimat, Prudential and Man Financial each sold 500 March, while funds sold 1,000. Iowa Grains bought 500 March, and Prudential bought 400 March.

 

Aside from the export inspection data, there was little other fundamental news out to impact prices, a CBOT floor source said.

 

There continue to be concerns about dryness in the U.S. Southern Plains, although some rainfall is expected there in the next couple days, sources said.

 

Eastern Kansas, eastern and southern Oklahoma and north-central Texas may see up to 3/4 of an inch, the DTN Meteorlogix weather firm said. Rainfall, however, is still expected to be below normal for the coming week, the firm said.

 

In Argentina, wheat-growing areas are dry, which may affect late development of the crop, Meteorlogix said.

 

Wheat-growing areas of Ukraine are also dry, and no rain is expected for the next week, which will mean continuing depletion of soil moisture, the firm said.

 

 

Kansas City Board of Trade

 

KCBT held early gains on buying from JP Morgan after CBOT and MGE turned lower in the day session, a KCBT floor source said.

 

"Compared to Chicago and Minneapolis, we certainly kept it up," the source said about prices. "Selling came in, and then we hit some stops."

 

Volume was seen as "fairly high," with a lot of the activity based on trading of the December/March spread, the source said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures trailed CBOT prices during the day session, a MGE floor source said.

 

"It just seems like we're following the same pattern where Chicago opens higher and we kind of follow them around," he said. "The follow-through buying just didn't show up."

 

In inter-market spreads, there was interest in buying MGE against CBOT in the back contract months, the source said. Trading was choppy, and volume was "pretty moderate," he said.