December 14, 2006

 

US Wheat Review on Wednesday: Settles higher on speculative buying

 

 

U.S. wheat futures closed higher Wednesday as speculative buying triggered a turnaround from early losses and advanced prices in thin trade, sources said.

 

Chicago Board of Trade March wheat settled 6 1/2 cents higher at US$4.88 1/2 per bushel, Kansas City Board of Trade March wheat closed up 3 1/2 cents at US$5.08 3/4, and Minneapolis Grain Exchange March wheat ended up 7 1/4 cents at US$5.06 1/4.

 

The gains came as a reversal from earlier losses suffered on a lack of fresh bullish fundamental news and an early lack of buying interest, CBOT floor traders said.

 

The speculative buying, however, came in and triggered some buy stops that pushed prices higher, the traders added. The advances were spurred by an absence of sellers, they said.

 

"There really wasn't any reason for wheat to go up," a source said. "There wasn't any news."

 

Wheat futures parted ways with the CBOT corn and soybeans markets, which ended weaker, an analyst noted.

 

Still, corn and soybeans began to trim their losses during the day session as wheat moved to the upside, he added. Wheat is a follower of corn, and corn's move to trim losses may have helped push wheat to the upside, he said.

 

"You could see the whole floor firm up together," the analyst said.

 

In CBOT pit trades, Man Financial bought 1,000 March and Citigroup bought 500 March. UBS sold 1,000 March, while Fimat sold 500 March and Man Financial sold 400 March. Funds bought an estimated 1,000 contracts.

 

The lack of news kept trading mostly quiet during the day session, sources said.

 

A trader noted Jordan said Wednesday it bought 50,000 metric tonnes of wheat from Toepfer in a tender for shipment during the first half of January.

 

India, meanwhile, said wheat output was likely to reach 74 million metric tonnes in 2007, up from an estimated 69.48 million tonnes this year, an official said. The government will concentrate on building local buffer stocks before pushing wheat exports, the official said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures felt spillover strength when CBOT corn and soybeans started to trim losses during the day session, a CBOT floor source said. Although corn and soybeans ended lower, their move toward the upside was supportive, he noted.

 

"We didn't stop," he said about advances for wheat. "We just kept seeing more buying come in. There wasn't enough resistance on the other side to slow it down."

 

Volume was lighter than normal, the source said. JP Morgan and Country Hedging were noted buyers, he added.

 

There was no fresh news out to support prices, he said.

 

"We're still in the holiday trading mode," the source said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures followed CBOT to the upside, a floor source said. There was little fresh news out, and volume was thin, he added.

 

Gains during Thursday's day session were seen as a rebound from losses Tuesday, the source noted.

 

In other news, grain customers from around the world have concerns about the pending termination of the president of the Canadian Wheat Board, the CWB said in a release late Tuesday.

 

The government is attempting to end the CWB's current monopoly on the marketing of western Canadian wheat, while CWB maintains farmers should be the ones to determine the future of the company.

 

Agricore United, meanwhile, has outright rejected Saskatchewan Wheat Pool's hostile takeover bid, but is still considering a number of other alternatives in regard to the company's future, Agricore United officials said Wednesday.

 

Agricore United officials wouldn't detail any of the possible alternatives, but it was suggested that considerations would be given to some sort of arrangement with foreign companies with Canadian assets.