December 16, 2006

 

US Wheat Review on Friday: Ends up on short-covering in thin trade

 

 

U.S. wheat futures crawled to a higher close Friday as late short-covering dragged up prices from negative territory, traders said.

 

Chicago Board of Trade March wheat settled 2 3/4 cents firmer at US$4.94 1/4 a bushel, Kansas City Board of Trade March wheat closed 1/4 cent up at US$5.09 3/4/bu, and Minneapolis Grain Exchange March wheat ended 2 3/4 cents higher at US$5.11/bu.

 

Overall, there was little CBOT floor interest in wheat during the day, sources said. Traders sat on the sidelines ahead of the holidays and without any fresh news to direct prices, they added.

 

Short-covering, however, pushed prices to the upside in the last minutes of the session, CBOT floor traders said. There was no fundamental support seen for the late rally, a trader noted.

 

U.S. wheat futures had posted modest gains in Thursday's day session, but follow-through buying failed to show up Friday, a source said. Indeed, prices opened lower Friday after weaker overnight activity and stayed on the downside with an absence of buyers and some consolidation seen ahead of the weekend, sources said.

 

Lower CBOT corn and soybeans futures offered spillover weakness, with pressure specifically seen from low cash corn prices, a trader said. Light fund selling of 1,000 contracts also depressed the market, he said.

 

In CBOT pit trades, Man Financial sold 800 March, while FC Stonnee bought 600 March.

 

Traders said they expected quiet, choppy activity to continue next week in the absence of any fresh market-moving news. Market participants are interested to see next week's figures on weekly export sales to find out whether recent price lows attracted new buying, an analyst added.

 

"We'll take a look at the export sales just to see if maybe these price levels attracted some additional buying interest," the analyst said.

 

In other news, Arkansas farmers planted double the amount of wheat from a year ago, bringing the crop to 750,000 acres, according to news reports. Larger wheat production next year is expected to dampen prices, analysts have said.

 

 

Kansas City Board of Trade

 

KCBT saw light volume trade with short-covering leading the late rally to the upside, a floor source said. Consolidation and an absence of buyers held prices lower earlier in the session, he added.

 

"Late in the day, people were trying not to go home short," the source said.

 

There was little interest from funds, the source noted. Wheat prices, however, felt some underlying pressure from weather forecasts for moisture next week in dry hard red winter wheat regions, he said.

 

The Southern Plains wheat areas will be dry this weekend, although there is a good prospect for rain and snow over at least part of the region from Monday to Wednesday, the DTN Meteorlogix weather firm reported.

 

Showers are forecast for the central and southern Texas Panhandle through north-central Texas on Monday, Meteorlogix said. Heavier rain or rain changing to snow will continue in this area and expand north into central Oklahoma and southern Kansas on Tuesday and Wednesday, the firm noted.

 

"Moisture will be welcome for winter wheat, as well as helping to ease severe drought conditions in most of Oklahoma through central Texas," Meteorlogix said.

 

Southwestern Kansas has a much lower chance of precipitation, the firm added.

 

 

Minneapolis Grain Exchange

 

Short-covering helped MGE wheat rebound from earlier losses in the day, a floor source said. MGE was following CBOT's lead, he noted.

 

Trading was quiet and thin, with the market in holiday mode, he added.

 

Mild temperatures over much of the Canadian prairies during the week ended Dec. 11 melted the existing snow-cover on winter wheat fields and, in turn, caused some concern about the vulnerability for winter-kill damage, according to the Canadian Wheat Board's latest crop update.

 

Milder weather moved into the western areas of the Canadian prairies, but cooler conditions continued in eastern Saskatchewan and Manitoba, the CWB said. The temperatures in the west were quite mild, with weekly deviations ranging between 3 and 10 degrees Celsius above normal.