December 4, 2007

 

US Wheat Review on Monday: Settles lower; technical sales, spreading

 

 

U.S. wheat futures ended lower across the board Monday, firmly planted in negative territory on technical weakness and corn/wheat spreading, analysts said.

 

March CBOT wheat ended 8 3/4 cents lower at US$8.76 3/4, March KCBT wheat settled 7 3/4 cents lower at US$8.98 1/2, and March MGE wheat finished 7 cents lower at US$9.34.

 

The market is looking toppy on technical charts, and without any fresh news to inspire market bulls, profit taking from recent gains surfaced, analysts added.

 

Position adjustments from speculative traders added to the defensive theme, with active corn/wheat spreading a featured attraction in otherwise quiet action, traders said.

 

There was no fresh news out to extend previous buying interest. Light moisture moving through the southern Plains during the weekend provided light pressure but eventually had a muted effect on prices amid reports that the moisture didn't provide any significant relief to dry crop areas, analysts added. Meanwhile, U.K. wheat area will rise by 13% in the 2008-09 crop year because of the removal of the European Union's mandatory set-aside in the coming season and competitive prices, according to estimates by field experts at U.K.-based ADAS.

 

India's federal government might purchase at least 330,000 metric tonnes of wheat from the latest tender floated by PEC Ltd., a senior government official said Monday.

 

Export inspections of U.S. wheat totaled 17.032 million bushels for the week ended Nov. 29, the U.S. Department of Agriculture reported. The figure was in line with the 14 to 20 million bushels forecast by analysts and slightly higher than the 16.217 million inspected the previous week. Year to date, wheat inspected for export is up 65.2% above the level reached last year.

 

The DTN Meteorlogix Weather forecast said the storm system that crossed the central U.S. this weekend brought very little moisture to Southern Plains winter wheat areas. Most areas had less than 0.1 inch precipitation. In addition, the forecast for the next 10 days has generally dry weather ahead for the region. There is no significant change to the dry outlook in the Plains through the next 10 days. Dry weather will continue to affect crop establishment; the worst of the dryness is slated for western areas.

 

In CBOT pit trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 4,000 lots.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures ended lower in light trade, with a lack of fresh news failing to generate much activity, floor traders said. The liquidation of December positions continued with the December/March spread trading from even to a 1-cent inverse, traders added.

 

KCBT November trading volume was up from October and from November 2006, the exchange said Monday in a press release. KCBT November wheat futures volume was 408,832 contracts, up from the 390,859 contracts traded in November 2006 as well as the 346,591 contracts traded in October.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended lower in sporadic volume, traders said. There was not a lot of news to move prices, with December/March spread trading out to 30 cents.

 

Intermarket spreading was featured, with Fimat, Country Hedging and UBS Securities reported to be buying Chicago wheat and selling Minneapolis wheat, a trader said.

 

The premium in Minneapolis wheat has extended about as far as many participants think it can go, which led to the Chicago/Minneapolis spreading, he added. Meanwhile, MGE said Monday it set a monthly volume record for the month of November, with overall monthly volume reaching the fifth-highest level ever. Total volume last month was 179,486 contracts, up 7% from the previous November record of 165,833 contracts set in 2004, according to the exchange.