August 19, 2006


US Wheat Review on Friday: Rebounds; kansas city board of trade wheat leads charge



U.S. wheat futures ended higher across the board Friday, bouncing back from earlier declines, with Kansas City wheat leading the recovery, analysts say.


Chicago Board of Trade September wheat futures ended 1 cent higher at US$3.64 1/2, September Kansas City wheat settled 7 1/2 cents higher at US$4.54 1/4 and Minneapolis September wheat ended 1 3/4 cents per bushel higher at US$4.48 1/2.


A combination of speculative fund and commercial buying served as the catalyst to ignite the rebound in prices, with active commercial interest after midday in Kansas City sparking ideas of fresh export demand, analysts said.


Wheat futures in all three markets climbed to session highs down the stretch, managing to bounce from negative territory after selling interest eroded, traders added.


Futures hovered below unchanged levels for most of the day, pressured by a lack of supportive demand news and disappointment over news Egypt shunned U.S. wheat in a tender in favor of Canadian wheat, traders said. The market was trying to find a price level that will spark demand, said a CBOT floor analyst.


The market gravitated lower, with long liquidation pressure in Minneapolis and Kansas City leading the declines, traders added.


This continued until futures ran into a void of selling pressure, opening the door for price recovery. Upside movement was fueled by late commercial buying in KCBT wheat, with bullish thoughts arising from speculation that the commercial buying was tied to export demand, analysts added.


In CBOT pit trades, JP Morgan and Tenco each bought 300 December. RJ O'Brien sold 600 December and JP Morgan sold 400 December.





Commercial buying from ADM Investor Services served as the key to the market's recovery. The buying in the December contract was seen in the December contract between 12:15 p.m. and 12:30 p.m. CDT at the US$4.58 to US$4.59 price level, traders said. The buying lifted futures to session highs, with local and fund buying coming on board, as many market participants were caught on the wrong side of the market, traders added.


Commercial and speculative fund buying were both estimated at 2,000 contracts. Man Financial bought 1,500 December, JP Morgan bought 400 December. ADM Investor Services was a late buyer of 500 December, and Fimat was a buyer of 700 December.





Weakness was seen in spring wheat futures for most of the day, with fund liquidation and technical selling weighing on prices, an MGE floor broker says. Speculators liquidated positions, until a late bounce in KCBT wheat emerged to spark later position squaring to boost prices into positive territory heading into the close.