US Wheat Review on Monday: Markets stumble, unable to sustain gains

 

 

U.S. wheat futures ended slightly lower Monday, with benchmark Chicago Board of Trade March wheat unable to sustain earlier gains above the psychologically important price of US$5 a bushel.

 

Chicago Board of Trade March wheat ended down 1/4 cent, or 0.1%, at US$4.98 1/4. Kansas City Board of Trade March wheat slipped 1 cent, or 0.2%, to US$5.01. Minneapolis Grain Exchange March wheat stumbled 1/4 cent, or 0.1%, to US$5.12 1/4.

 

CBOT March wheat pulled back late and closed below US$5 for the fourth consecutive session. The contract hit a session high of US$5.04 in electronic trading and was unable to break above a resistance area of US$5 to US$5.05, a trader said.

 

The markets weakened amid a lack of fundamental support after spending much of the day in positive territory, analysts said. U.S. wheat supplies are at a 22-year high, and traders are not yet convinced of a pick-up in export demand.

 

The U.S. Department of Agriculture on Friday reported that weekly U.S. wheat export sales for delivery in 2009-10 were a marketing-year high of 825,800 tonnes. However, traders are looking for weeks of solid sales reports to confirm an improved demand trend.

 

"If you get three or four of those put together, you say, 'Gee, we might actually make USDA's last forecast'" for 2009-10 wheat exports, said Alan Brugler, president of Brugler Marketing and Management.

 

 

Kansas City Board of Trade

 

KCBT March wheat closed near its session low of US$5.00 1/2 and traded in a tight 6 1/2-cent range.

 

Prices pulled back after rising earlier in the session on short covering amid ideas the market is in an oversold condition, a trader said. Volume was light, and trading was choppy.

 

Wheat is due for a bounce after sliding during the past two weeks, traders said. It seems the markets are in a consolidation mode and could find support later in the week from profit-taking by shorts, a broker said.

 

 

Minneapolis Grain Exchange

 

MGE March wheat traded in a range of US$5.10 1/2 to US$5.18 and closed near its session low.

 

Weekly U.S. wheat export inspections of 16.875 million bushels topped trade estimates of 9 million to 14 million. Still, large supplies continue to hang over wheat and encourage traders to sell strength in the markets, an analyst said.