December 19, 2006

 

US Wheat Review on Monday: Ends down on early selling, no bullish news

 

 

U.S. wheat futures closed lower Monday, with prices under pressure from a continuing consolidation trend and unable to rebound from early liquidation, traders said.

 

Chicago Board of Trade March wheat ended 6 3/4 cents lower at US$4.87 1/2 a bushel, Kansas City Board of Trade March wheat closed down 6 3/4 cents at US$5.03, and Minneapolis Grain Exchange March wheat settled down 9 cents at US$5.02.

 

Wheat futures opened lower on follow-through selling from weaker overnight activity and gave back some gains earned in a late rally Friday, a CBOT floor trader noted. Funds also sold an estimated 3,000 contracts early, he said.

 

A consolidation trend continued during the day session, with traders looking ahead to the Christmas holiday and the end of the year, sources added. Once prices were planted in negative territory, there was no fresh bullish fundamental news to rally on, they said.

 

U.S. wheat export inspections for the week ended Dec. 14 were 11.444 million bushels, the U.S. Department of Agriculture reported. Analysts surveyed by Dow Jones Newswires had estimated inspections would range from 17 million to 23 million bushels.

 

Traders had expected higher numbers because they had hoped recent price declines would attract more export business, sources said.

 

For the current market year to date, 450.619 million bushels have been inspected for export, down from 562.241 at the same time last year, according to the USDA.

 

"The demand story never showed up," a CBOT floor trader said.

 

In other bearish news, precipitation is forecast for dry areas of the U.S. Southern Plains, an analyst says.

 

The DTN Meteorlogix forecast calls for precipitation of up to 1 1/2 inch to cover much of the southwest and southern Plains from Tuesday through Wednesday. Heaviest moisture will be in a corridor from Wichita, Kan., south to Wichita Falls, Texas, the firm reported.

 

For winter wheat in the southwest Plains, the oncoming moisture will be "very beneficial," Meteorlogix said. Dodge City, Kan., for example, has endured a stretch of more than 50 days since its last occurrence of one-quarter inch precipitation, according to the weather firm.

 

In CBOT pit trades, Calyon bought 500 March. JP Morgan sold 1,000 March, while Fortis sold 400 March. Fimat sold 500 March and spread 500 March-July.

 

Funds remained net long in U.S. wheat futures in the week ended Dec. 12 but were seen to cut some length, the Commodity Futures Trading Commission reported.

 

Funds were net long 23,241 contracts at CBOT, the CFTC said. They cut long CBOT positions by 11,413 contracts and increased shorts by 1,436 contracts.

 

 

Kansas City Board of Trade

 

Trading was quiet, and volume was low during the day session, a KCBT floor source said. Early follow-through selling brought the market lower, and there were no fresh inputs to engineer a turnaround, he said.

 

Export inspections were "horrible," the source added. Forecasts for precipitation in the Plains also weighed on prices, he said.

 

Wheat futures trimmed some losses late in the session as CBOT corn trimmed losses a bit, the source said.

 

At KCBT, funds were net long 31,698 contracts for the week ended Dec. 12, according to the CFTC. Funds decreased long positions by 5,312 contracts and short positions by 62 contracts.

 

 

Minneapolis Grain Exchange

 

Trading was thin at MGE, a floor source said. Prices followed CBOT futures lower, he noted.

 

There is little trading interest ahead of the holidays and going into the new year, the source added.

 

At MGE, funds increased long positions by 379 contracts and cut shorts by 103, the CFTC reported. Funds were net long 12,045 contracts at MGE.