December 28, 2006

 

US Wheat Review on Wednesday: Ends down on profit-taking; corrects gains

 

 

U.S. wheat futures ended near session lows Wednesday as profit-taking and an absence of fund buying weighed on prices, analysts said.

 

The losses were seen as a correction to recent gains, sources added.

 

Chicago Board of Trade March wheat settled 9 3/4 cents lower at US$5.07 per bushel, Kansas City Board of Trade March wheat closed 8 cents weaker at US$5.12, and Minneapolis Grain Exchange March wheat ended down 8 1/4 cents at US$5.13.

 

Wheat futures had posted solid advances in recent sessions, although CBOT March wheat had a sloppy close Tuesday that showed some weakness, a CBOT floor trader said. Wheat traded lower in the overnight electronic session and gave back more gains during the day session, he noted.

 

Fund buying that supported the recent rallies was absent Wednesday, sources added. Instead, funds were sellers of an estimated 1,000 contracts in thin trade at CBOT, a source said.

 

In CBOT pit trades, JP Morgan sold 500 March, and Man Financial sold 300 March.

 

Wheat also is seen as a follower of CBOT corn, and corn ended lower Wednesday, sources noted. Wheat needs a rally in corn or fresh export business to move to the upside, one trader said.

 

There was little fresh fundamental news for wheat, and the news that did come out was considered bearish, an analyst said.

 

Pakistan, for one, said it has allowed the export of 500,000 metric tonnes of wheat because of a better harvest this season and relatively high international prices. The government could export even more wheat depending on domestic and international market conditions, an official added.

 

Pakistan currently has sufficient wheat stocks of close to 2 million tonnes, the official added. The government banned wheat exports more than two years ago because of poor harvests and rising domestic prices.

 

The news was seen as negative because U.S. wheat export sales have been sluggish this year amid tightened supplies, a source said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures followed CBOT action during the day session, a floor source said. Pressure from weaker CBOT corn also weighed on wheat, he added.

 

"All we were doing was following Chicago," the KCBT floor source said. CBOT "corn and beans relaxed a little bit."

 

There also is continued disappointment over slow export business, the source noted. The news of Pakistan's exports was negative, he said.

 

"We really don't have any export business going on anyway," he said. "It's really ugly."

 

Forecasts for moisture in winter wheat regions further pressured prices, sources noted.

 

Hard red winter wheat growing areas, including eastern Colorado and Kansas, will benefit from precipitation moving through the area this week, T-Storm Weather said.

 

Much of the precipitation will fall as rain, especially to the east of Nebraska and Kansas, T-Storm added. However, a significant snowstorm is a decent possibility across the western Plains of Nebraska, Colorado and Kansas, the weather service reported.

 

The moisture should boost soil moisture, T-Storm noted.

 

 

Minneapolis Grain Exchange

 

There was moderate fund selling at MGE, a floor source said. Mostly, the trading session was slow and dull, he noted.

 

Rains for winter wheat areas are seen as bearish, the source said. Otherwise, there was no other news for bulls to feed on, he added.