December 30, 2006

 

US Wheat Review on Friday: End mostly lower amid position squaring

 

 

U.S. wheat futures ended mostly lower Friday as traders squared positions on the last trading day of the year, under pressure from news of weak export sales and bearish weather in the Plains, analysts said.

 

Chicago Board of Trade March wheat closed 3 1/4 cents lower at US$5.01 a bushel; Kansas City Board of Trade March wheat settled down 2 1/2 cents at US$5.09 3/4, and Minneapolis Grain Exchange March wheat ended up 6 1/4 cents at US$5.18 1/2.

 

Trading was choppy, with traders putting themselves in positions ahead of the New Year, a CBOT floor trader said. There were big trades late in the day session, although overall volume was thin, he noted.

 

In CBOT pit trades, JP Morgan bought 500 March and ABN Amro bought 500 March, while Fimat sold 400 March, sources said.

 

There also was some pressure from funds selling at least 800 contracts, sources said.

 

"It was a squirrelly, swirly close," a CBOT floor source said.

 

Wheat futures came under pressure early in the day as the U.S. Department of Agriculture released weekly export sales for the week ended Dec. 21.

 

The USDA reported wheat export sales were 354,200 metric tonnes, on the low end of analysts' estimates of between 350,000 tonnes and 550,000 tonnes. The sales were 22% below the previous week and 25% below the prior four-week average, the USDA said.

 

Major sales increases were seen for Taiwan, which bought 96,800 tonnes, and Japan, which bought 93,000 tonnes.

 

The sales were seen as weak and weighed on prices amid ongoing disappointment over sluggish export business, traders said.

 

Weather forecasts also were bearish, sources added.

 

The DTN Meteorlogix forecast called for moderate-to-heavy snow Friday through Saturday from eastern Colorado through western and central Kansas, into southern Nebraska, and south through the Texas Panhandle. Snowfall of seven to 15 inches or more is likely for eastern Colorado, west-central and northern Kansas and southwestern Nebraska, the firm noted.

 

Further south, snow of four to 10 inches is headed for southwestern Kansas through the Oklahoma and Texas Panhandle region, the firm said. The remainder of the Southern Plains will have rain, with a brief changeover to snow during Sunday, Meteorlogix noted.

 

Total precipitation from this weekend's moisture will range from three-quarters of an inch to two inches, with near-general coverage, the firm added.

 

"Winter wheat and pastures will benefit greatly due to the moisture, which will soak into the soil profile readily," Meteorlogix said.

 

The CBOT, KCBT and Minneapolis Grain Exchange closed at noon CST Friday ahead of the New Year's holiday. The exchanges will also be closed Monday for New Year's Day, and open auction wheat trading will be closed Tuesday in honor of the national day of mourning for President Gerald Ford.

 

 

Kansas City Board of Trade

 

KCBT wheat futures saw position squaring during the day session, a floor source said. There also was pressure from the forecasts for precipitation, he noted.

 

Overall, volume was heavier than Thursday, with traders in the market on the last day of the year, he said.

 

 

Minneapolis Grain Exchange

 

Commission house buying pulled MGE wheat higher at the close, a floor source said. The commission houses were likely selling CBOT and KCBT at the same time they were buying MGE, he noted.

 

Volume was moderate, he said.

 

"For a shortened session, it was okay," he said.