October 24, 2008

 

US Wheat Review on Thursday: Settles up on technical buys, spillover support

 

 

U.S. wheat futures ended higher Thursday, climbing on technical buying attributed to oversold conditions and spillover support from outside markets.

 

December CBOT wheat ended 5 1/4 cents higher at US$5.23, December KCBT wheat settled 3 1/2 cents higher at US$5.53, and December MGE wheat finished 5 3/4 cents higher at US$6.05 1/2.

 

The market staged a recovery from recent setbacks, but wheat remained a follower of other grains and the influence of outside markets, a CBOT floor analyst said.

 

Futures trimmed their advances down the stretch, succumbing to late profit-taking pressure amid pressure from the stock market dipping into negative territory and energy futures pulling well off earlier highs, analysts added.

 

Overall, traders were impressed with the market's ability to hold above unchanged levels in the face of bearish sentiment tied to a lack of fresh demand. Otherwise, activity was light, with participants unwilling to take an aggressive stance in the face of global economic uncertainties.

 

Demand remains a thorn in the side of the wheat market's upside chances, with news of Japan canceling its weekly tender, the Ukraine and France securing buying at the expense of the U.S. and weekly export sales failing to show any significant sales to usual strong purchasers of U.S. supplies, analysts said.

 

The impression traders have now is that it is a buyers market in world export channels, and if prices rally, end users will probably back away, said Shawn McCambridge, senior grains analyst with Prudential Bache in Chicago.

 

U.S. Department of Agriculture reported total weekly wheat export sales were a net 386,900 metric tonnes for the week ended Oct. 16. Analysts had forecast sales between 300,000 and 550,000 metric tonnes. The primary buyers were Guatemala with 60,000 metric tonnes and China with 60,000 tonnes.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said rain, snow and colder temperatures are likely to delay the final planting effort in the central and southern U.S. Plains during the next 3-5 days. After that, it looks to be warmer and drier.

 

In CBOT pit trades, speculative fund buying was estimated at 2,000 lots.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures ended higher in quiet trade Thursday. Traders said the market followed the lead of Chicago wheat while eyeing price movements in outside financial markets for direction.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures were quietly dragged higher on a technical bounce from the market's recent sell-off. Futures were influenced by advances in Chicago wheat, an MGE floor broker said. The absences of cash movement helped the inverted nearby spreads, with light export sales for spring wheat having little impact on prices, analysts said.

 

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