February 7, 2006


US Wheat Review on Monday: Mostly lower; kansas city board of trade scores new high



U.S. wheat futures settled mostly lower Monday, despite a rally in Kansas City Board of Trade March to a new life-of-contract high.


Light fund buying and continued dryness in the southern Plains, where the majority of the hard red winter crop is grown, helped support futures in Kansas City, sources said.


Futures in both Chicago and Minneapolis consolidated after recent fund- induced strength, floor sources said.


CBOT March wheat settled 1 1/2 cents lower at US$3.55, KCBT March rose 6 cents to US$4.17 1/2, and MGE March wheat fell 1/2 cent to US$4.04.


Fund buying and continued concerns over the dryness in the southern Plains helped provide support for hard red wheat futures in Kansas, with the March contract making a life-of-contract high, floor sources said. Fund buying was estimated at 1,500 contracts.


Both Chicago and Minneapolis futures moved higher in sympathy with the rally in hard red wheat futures. But when KCBT market fell from its session highs, Chicago and Minneapolis turned lower, preferring to consolidate after recent strength, floor traders said.


The strength in Kansas City wheat reflected fundamental concerns, said Shawn McCambridge, senior grain analyst with Prudential Financial in Chicago. It remains dry in the southern Plains, and U.S. export sales of hard red winter wheat have remained firm, he added. Both Chicago and Minneapolis wheat don't share those concerns, and as a result, without any fund participation, they were following the hard red market, he said.


On technical charts, CBT March traded an inside day, within Friday's high and low, and MGE March almost traded an outside day, matching Friday's low and trading above Friday's high.


In CBOT trades, Calyon Financial bought 700 March, O'Connor bought 500 March and R.J. O'Brien bought 500 March. JP Morgan sold 400 March and UBS sold 500 March.


In KCBT trades, ADM Bought 200 March and 200 December, and Fimat bought 500 March and 100 May. UBS sold 200 March and Fimat sold 250 March and 100 December.


In global wheat news, Iraq has reportedly postponed its decision on its tender for up to 1 million tonnes of optional-origin wheat, with Iraqi officials now expected to announce the details of the tender on Wednesday.


Despite slightly higher wheat seedings this season, India wheat production is seen under 74 million metric tonnes in 2006 a senior India government official said Monday.


Argentina's 2005-06 wheat harvest totaled 12.011 million metric tonnes, the Buenos Aires Cereals Exchange, said Monday. According to the exchange, wheat production is down 26.4% from the 16.345 million metric tonnes produced last year, the exchange said.