November 30, 2006

 

US Wheat Review on Wednesday: Prices bounce higher in late rally

 

 

U.S. wheat futures closed moderately higher Wednesday in a late bounce from recent losses, sources said.

 

Wheat futures traded lower for most of the day session but recovered in an end-of-the-day rally with short-covering and bargain buying seen, analysts said.

 

Chicago Board of Trade March wheat closed 3 1/2 cents higher at US$5.11 1/2 a bushel, Kansas City Board of Trade March wheat settled 5 1/2 cents up at US$5.41 1/2, and Minneapolis Grain Exchange March wheat ended 2 1/4 cents firmer at US$5.21.

 

There have been significant declines in wheat prices this week, with lower closes to Monday's and Tuesday's day sessions, analysts said. That led to choppy, weaker action prior to the rally, they said.

 

"We've had a nice sell-off," said Vic Lespinasse, a CBOT floor analyst with AG Edwards & Sons. The market was "due for some sort of a bounce."

 

Prior to the rally, sources said there was selling in advance of first notice day Thursday, the first day on which notices of intention to deliver actual commodities against futures market positions can be received. Deliveries against CBOT December wheat are expected to range from 2,500 to 6,000 contracts, traders and analysts said Wednesday.

 

There also was no fresh fundamental news out to boost prices, a CBOT floor trader said. Market participants are still waiting to see new export business and are disappointed with the pace of sales amid tightened global supplies, he said.

 

The U.S. Department of Agriculture is set to release weekly export sales figures Thursday.

 

"It's going to be a big day," the trader said.

 

Spillover weakness from neighboring corn and soybean markets was also seen to pressure wheat before the late rally.

 

In other news, agronomists said wet weather prompted some soft red winter wheat growers to plant smaller crops this season, even though they wanted to seed more soft red winter wheat to take advantage of high futures prices.

 

Heavy rains during the fall harvest season in Ohio, Indiana and Illinois prevented producers from removing corn and soybean crops from the ground and planting SRW wheat, the agronomists said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures were weaker all day until the late rally hit, a floor source noted. There was not a lot for sale as prices climbed higher, he said.

 

There was not much affect on trading from the impending first notice day, but a "decent" amount of the December/March spread was traded, he said.

 

Wheat traders estimate deliveries against December hard red winter wheat futures at the Kansas City Board of Trade will range from 200 to 1,000 contracts.

 

 

Minneapolis Grain Exchange

 

Trading at MGE was centered on the arrival of first notice day, a floor source said. A lot of traders were entering and exiting the December/March spread, he said.

 

"People were a little antsy on the spread and people were nervous about getting out of the Dec," he said.

 

Traders said they expect MGE December deliveries to be between zero and 200 contracts.

 

Otherwise, MGE wheat futures followed CBOT prices lower during most of the day session and to the upside late, he said.