February 14, 2006
US Wheat Review on Monday: Lower; kansas city board of trade leads declines
U.S. wheat futures finished lower Monday in modest activity as a lack of fund buying and spillover weakness from hard red winter wheat futures at the Kansas City Board of Trade helped push soft red and spring wheat futures lower, sources said.
Traders attributed some of the declines to reports that Iraq was considering Canadian or E.U. wheat to fill its recent tender for wheat due to high U.S. prices.
Iraq had been expected to announce the results of its tender on Sunday but has delayed the announcement once again until Wednesday.
CBOT March wheat fell 7 1/4 cents to US$3.48 per bushel, KCBT March dropped 15 cents to US$4.15 cents, and MGE March wheat declined 10 1/2 cents to US$3.99 1/2.
The market was weak from the opening and stayed that way all day, a commercial connected trader said. It was heavy with no feature to support it, he added.
The recent rally in wheat was overdone and due for a correction, a floor analyst said. The latest commitments of traders reported large non-commercial traders were long more than 50,000 contracts at the KCBT, and there was not much news to support those positions on Monday, he added.
U.S. export inspections were below expectations and soft red wheat inspected for export was almost "non-existent," a trader said. Soft red winter wheat inspected for export totaled 1.57 million bushels out of the 16.3 million inspected. "You could fill up a Chevy Suburban with that amount," the trader added. Soft red winter wheat is the type traded in Chicago.
Spillover weakness from Friday's losses also added to the overall tonnee of the market, the commercial connected trader said.
Since reaching its high of US$4.36 on Thursday, March KCBT wheat has fallen 21 cents, with March CBOT losing 17 cents and MGE white wheat futures retreating 18 1/2 cents.
On technical charts, CBOT March settled below its 10-day moving average for the first time since Jan. 23.
In CBOT trades, JP Morgan bought 1,000 May and 200 December, the Refco division of Man Financial bought 600 May, O'Connor bought 300 May and 300 July, UBS bought 300 March, and Prudential bought 200 March.
JP Morgan sold 1,500 March, Calyon sold 200 March, Man Financial sold 1,000 May and 500 March, Kottke sold 300 March and O'Connor sold 200 May.
Commodity fund selling was estimated at 3,000 contracts.
In KCBT trades, ADM bought 400 March and sold 100 May, Frontier futures sold 100 March, 100 May and 100 July, and Prudential Financial bought 100 May and sold 100 March.
Dry conditions with a little light rain or snow are expected over the next several days in the northern portions of the central and southern Plains wheat region, DTN Meteorlogix weather said. Light snow/rain is forecast for period of Friday through Sunday in the southern sections of the region, DTN Meteorlogix weather said. Temperatures are expected to change from above normal to below normal and then repeat once more, but no damaging cold is expected, Meteorlogix added.