December 29, 2006

 

US Wheat Review on Thursday: Mostly Lower On Bearish Weather

 

 

U.S. wheat futures ended mostly lower Thursday as bearish fundamental factors pressured prices in the absence of strong fund or speculative buying, sources said.

 

Chicago Board of Trade March wheat ended 2 3/4 cents lower at US$5.04 1/4 per bushel, Kansas City Board of Trade March wheat settled up 1/4 cent at US$5.12 1/4, and Minneapolis Grain Exchange March wheat closed down 3/4 cent at US$5.12 1/4.

 

Wheat futures opened stronger on follow-through speculative buying from firmer overnight action, a CBOT floor trader noted. Spillover strength from CBOT corn and soybeans also lent early support to wheat, he said.

 

The speculative buying, however, was largely exhausted by midday, sources said. CBOT corn, which is considered the leader of wheat, also trimmed its gains somewhat, they added.

 

There was no supportive fundamental news out for wheat, sources said. Instead, bearish weather forecasts for wheat-growing areas in the U.S. Southern Plains and eastern Midwest predict beneficial precipitation will fall.

 

"The only thing you can really arguably say about wheat is that it was a little negative because we got a little rain and a snow system," said Dale Durchholz, senior analyst with AgriVisor. "There's just nothing else. When you step back a minute and you realistically look at the wheat market, that really is the biggest element."

 

Fund buying rallied CBOT wheat futures earlier in the week but did not show up Thursday, floor traders said. Funds were estimated at even, they said.

 

In CBOT pit trades, Fimat sold 400 March. Tenco spread 400 July-March.

 

CBOT, Kansas City Board of Trade and Minneapolis Grain Exchange wheat markets close at noon CST Friday and will be closed Monday in observance of New Year's day.

 

Traders are looking toward the release of weekly U.S. wheat export sales Friday morning, sources said. Export business has been sluggish and disappointing so far, they noted.

 

Strong sales for wheat or for corn could help wheat move to the upside, an analyst added.

 

 

Kansas City Board of Trade

 

KCBT wheat futures saw some early spillover support from gains in Malaysian palm oil prices, which moved sharply higher overnight, a floor source said. That support did not last long, however, he noted.

 

Sell stops were uncovered later in the day session and helped trim gains, the source added. Trading was choppy ahead of the new year amid position evening, he said.

 

Hard red winter wheat growing areas are expected to see more precipitation in the next two days, which is seen as negative for prices, the source said.

 

 

Minneapolis Grain Exchange

 

The day session was quiet, and trading was thin at MGE, a floor source said. Wheat futures followed CBOT's lead, he added.

 

"We were trailing CBOT the whole day," the source said. "We went higher after gains in the overnight, but there was no reason for us to up there."

 

A lack of buying interest from funds further depressed prices, the source noted.