December 13, 2005

 

US Wheat Review on Monday: Climbs on technical buys,spillover support

 

 

U.S. wheat futures climbed Monday, bouncing back from Friday's slide to contract lows on technical buying related to oversold ideas and spillover momentum from rallying corn and soybean prices, analysts said

 

CBOT March wheat futures ended up 7 1/4 cents at US$3.14 3/4; March Kansas City wheat settled 2 1/4 cents higher at US$3.60 1/4; and Minneapolis March wheat ended 3 1/4 cents per bushel higher at US$3.70.

 

The gains were technical in nature, with oversold conditions and outside support from corn and soybeans serving as the catalysts for the gains, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

A general market sentiment that a fair amount of speculative money is poised to move into grain futures has traders leery of being short at current levels, traders added. Chicago wheat was the leader Monday, with Kansas City and Minneapolis followers on the day.

 

The fact that Chicago was the leader in U.S. wheat markets was an illustration that the gains were technically related, as soft wheat has the weakest fundamentals of the classes, added McCambridge.

 

Short covering was a featured attraction, but end-user activity remained quiet, as cash participants were unwilling to get to excited about a short-covering bounce in a bear market, traders added.

 

Meanwhile, the U.S. Department of Agriculture said export inspections were 26.999 million bushels, higher than the 15 million to 20 million expected by the market.

 

In CBOT pit trades, Man Financial bought 2,000 March; Calyon Financial bought 600 March; Fimat bought 500 March; and Goldenberg Hehmeyer bought 300 March. Cargill sold 500 March; Fimat sold 1,500 March; and Citigroup sold 300 March.

 

Commodity funds were estimated buyers of 3,500 contracts.

 

 

KANSAS CITY BOARD OF TRADE

 

Kansas City wheat futures ended mostly higher in quiet trade, bolstered by spillover strength from Chicago, corn, soybeans and wheat, traders said.

 

Overall volume was light, with traders unwilling to aggressively buy into the market based on non-fundamentally based gains.

 

K.C. traders said export inspections were solid but not enough to generate fresh buying.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

Minnesota wheat experienced a quiet session, stuck in between the strong gains in Chicago and the measured gains of Kansas City, said a trade source.

 

Country movement was light and commercial pricing is below the market, generating ideas futures are fairly priced in the US$3.70 price range basis the March contract, said MGX trader.