December 18, 2007

 

US Wheat Review on Monday: Backpedals on profit taking from new highs

 

 

U.S. wheat ended lower across all three U.S. wheat markets Monday, succumbing to speculative profit-taking after an early upside push to all-time highs ran out of steam, analysts said.

 

March CBOT wheat ended 13 1/2 cents lower at US$9.66, March KCBT wheat settled 13 3/4 cents lower at US$9.85 1/2, and March MGE wheat finished 16 1/4 cents lower at US$10.59 1/2.

 

The market experienced an emotionally charged push to new milestonnees initially, but the absence of follow-through buying at the highs uncorked profit-taking pressure to send prices retreating lower, analysts said.

 

Fundamentally, the market's purpose is to determine a price level to ration demand to meet essential needs amid tight global stocks, and with recognition of importers starting to turn down higher-priced wheat, futures had little incentive to extend the early push, said Bill Nelson, associate vice president A.G. Edwards and Sons in St. Louis Missouri.

 

Bull spreading was featured as well, with participants buying nearby contracts amid its tight supply outlook while selling new crop futures on improved moisture in the plains for winter wheat crops, analysts added.

 

Otherwise, futures had little fresh fundamental influences, with speculative-based buying running out of gas after fresh money chasing wheat futures slowed after satisfying nearby upside objectives, traders said.

 

The DTN Meteorlogix Weather forecast said moisture received from this past weekend's rain/snow/ice mix was beneficial to wheat in the U.S. Southern Plains. Precipitation ranged up to 1.25 inches and locally heavier through eastern Oklahoma and northeast Texas during the weekend. In Kansas, moderate snow, ice and rain produced up to 0.75 inch precipitation, Meteorlogix reports.

 

In addition, snowfall of 8 to 13 inches and locally heavier occurred from near Dodge City to Hays, Kan., during this timeframe. This moisture provided a much-needed boost to soil moisture supplies along with protection from cold-weather conditions for hard red winter wheat in the Plains, Meteorlogix said.

 

In CBOT pit trades, Citigroup and Fimat each bought 300 March, and Shatkin Arbor sold 500 March. Sellers were scattered among various commission houses, with UBS Securities a seller of 500 March. Speculative fund selling was estimated at 3,000 lots

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures ended lower, setting back on profit taking from earlier highs. The market whipsawed around for most of the day, with buyers looking weary, but not bearish, a KCBT floor broker said. Profit taking was the theme, after no follow-through buying emerged on the initial climb higher, analysts added.

 

In pit trades, MF Global bought 700 July, Fimat bought 400 March and UBS Securities bought 300 March, while Prudential Financial sold 300 March and JP Morgan sold 300 July.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended lower, retreating on profit taking after some short-lived gains in early action, an MGE floor broker said. Overall activity was thin, with a good distance between bid and offers, he added. The market moved in lockstep with movements in Chicago, with no participants showing signs of wanting to take an aggressive position, traders added.