August 24, 2006

 

US Wheat Review on Wednesday: Climbs on speculative buys; CBOT wheat leads

 

 

U.S. wheat futures scored a technical bounce Wednesday, climbing on speculative-led buying, with the exhaustion of selling pressure and lingering talk of potential export demand providing support.

 

Chicago Board of Trade December wheat futures ended 7 cents higher at US$3.87, December Kansas City wheat settled 4 cents higher at US$4.66 1/2 and Minneapolis December wheat ended 2 1/4 cents per bushel higher at US$4.51.

 

The market's recent declines were a bit overdone, and when you add in lingering talk of Brazil looking to import wheat supplies, speculative buyers emerged to build a base for prices, analysts said.

 

CBOT wheat was the upside leader of futures, with speculative fund buying estimated between 4,000 and 5,000 contracts a key driver in the upside push. The market's selling pressure showed signs of exhaustion, providing the opportunity for prices to climb, said a CBOT commission house broker.

 

Fundamental news remains scant, but with overdone losses, spillover support from a recovery in corn and soybeans, wheat was poised to find some buying support, traders added.

 

Nevertheless, active CBOT wheat futures remain firmly planted beneath meaningful resistance levels, and without confirmation of good export demand, the market's gains may be limited to modest technical bounces, said a CBOT trader.

 

Favorable weather conditions in the southern plains winter wheat belt were seen limiting upward moves in Kansas City.

 

Meanwhile, the DTN Meteorlogix forecast said southern Plains winter wheat areas, which have had some notable rainfall and a re-charging of soil-moisture profiles in the region through much of this month, will have a drier weather trend over the next seven days. Temperatures will be near to above normal, with rainfall mostly below normal.

 

In CBOT pit trades, Rosenthal bought 1,000 December, Fimat and Tenco each bought 800 December, and Calyon Financial bought 700 December. Iowa Grain bought 500 December and O'Connor bought 400 December. Calyon Financial was a seller of 500 December and Man Financial sold 400 December.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat ended higher, climbing in moderate volume. A speculative-led bounce fueled the recovery, but the market failed to break out of its recent range, as the importance of weather ahead of fall plantings and a lack of fresh news, continues to keep prices yo-yoing back and forth within a range, a KCBT trade analyst said.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended higher across the board in quiet trade, losing ground to KCBT and CBOT markets. The market was pulled higher by Chicago wheat, but with a fundamental boost to attract buyers, upside potential remains limited, said a MGE trader.