November 2, 2006

 

US Wheat Review on Wednesday: Prices follow corn to higher close

 

 

U.S. wheat futures settled higher Wednesday in a rebound from a sharply lower close Tuesday and on carryover interest from stronger corn prices, analysts said.

 

December Chicago Board of Trade wheat ended up 4 1/2 cents at US$4.87 1/2 per bushel, December Kansas City Board of Trade settled 3 cents higher at US$5.19, and December Minneapolis Grain Exchange wheat closed 4 1/4 cents higher at US$4.99 1/2.

 

CBOT December wheat prices tumbled 18 cents lower Tuesday with pressure from end-of-the-month profit-taking.

 

Sid Love, a market analyst with Kropf & Love Consulting, said the turnaround came largely on corn's strength.

 

"I think corn's kind of driving the boat," Love said. "It's the first day of the month. It looks like the funds are back in."

 

The day session opened choppy, but prices climbed higher and stayed firmer for most of the day. Traders trimmed gains by several cents at the close.

 

Higher prices are still being underpinned by global supply concerns and the expectation that world demand will eventually come to the U.S., traders said.

 

Egypt on Wednesday bought 60,000 metric tonnes of U.S. soft white wheat and 150,000 tonnes of Russian wheat. The purchase was seen as somewhat bearish for U.S. prices because of its size and because Egypt bought cheap wheat.

 

"I really thought when you had that kind of a break in the market yesterday that the Egyptians would take more than 60,000," Love said.

 

It also came as a surprise that Russia still had wheat available to export, sources said.

 

"We need the demand to come here," one analyst said.

 

The U.S. Department of Agriculture said this week that export inspections so far this year were 347.727 million bushels, down from 421.547 million last year. Love said traders were looking for those numbers to pick up.

 

"So far, they haven't," he said.

 

 

Kansas City Board of Trade

 

A KCBT floor source said wheat prices followed CBOT corn higher. He said wheat futures started moving up after traders saw Wednesday morning that prices would not take out Tuesday's lows.

 

"I think you probably have people afraid of being short wheat down here," he said.

 

The source said volume was not too heavy, although the December/March spread is "pretty well traded."

 

The Kansas City Board of Trade last month broke its October monthly volume records for the wheat futures contract and for the exchange as a whole, officials said Wednesday.

 

The hard red winter wheat futures volume totaled 421,499 contracts, topping the previous October monthly volume record of 313,491 contracts by 34.5%, according to the exchange. The previous record was set last year.

 

Total exchange volume, meanwhile, was 465,752 contracts, exceeding the previous October volume record of 342,315 contracts by 36.1%, the exchange said. That record was also set last year.

 

 

Minneapolis Grain Exchange

 

MGE wheat prices followed CBOT activity higher, a MGE floor source said.

 

"I think by ourselves we were followers today," he said. "We were following Chicago wheat, which was following Chicago corn."

 

Volume was light-to-medium, he said, and there was some early fund selling.