November 19, 2008


US Wheat Review on Tuesday: Lower; lack of news keep trade cautious



U.S. wheat futures ended lower Tuesday, backpedaling from earlier gains, as a lack of fresh fundamental news kept traders cautious of aggressively pushing the market.


March CBOT wheat ended 4 1/2 cents lower at US$5.49 1/2, March KCBT wheat settled 5 cents lower at US$5.75, and March MGE wheat finished 8 cents lower at US$6.17 1/4.


The inability of the market to hold onto morning gains disappointed buyers, and with abundant world supplies and a lot of cheaper wheat from the E.U. and Black Sea in the market, traders took a cautious approach to pushing prices, said Shawn McCambridge, senior grains analyst with Prudential Bache in Chicago.


Futures continue to hover within a trading range, with bearish world supply fundamentals keeping a lid on advances, while strong demand and talk of the market finding a near term bottom underpinning prices.


Technically, the market has the potential to make new lows, but prices are nearing an area where wheat has value in the US$5.22 range, providing promise for upside movement, analysts said.


There was nothing on the fundamental side for traders to sink their teeth into, and that sets the stage for a continuation of sideways price action until something fresh fundamentally develops or outside markets make a strong move, McCambridge added.


The corn/wheat spread that had been volatile in recent sessions was active in early action, but some unwinding of the spread was noted in later trade, a CBOT floor broker said.


Meanwhile, the DTN Meteorlogix Weather Service forecast said rainfall during the week may cause harvest delays in Australia, especially in New South Wales but also possibly in West Australia as well.


In Argentina's central crop belt, the trend toward below-normal rain and above-normal temperatures continues. This weather pattern is increasing stress to wheat and early planted summer crops.





A quiet news front promoted a similar price action to CBOT wheat in KCBT wheat. A lack of fresh fundamental news, with world importers not have a shortage of origins for supplies and concerns about outside markets producing a fair amount of caution in the market, a KCBT floor analyst said.





The inability of the market to sustain an early push higher in the face of rumors Pakistan may tender for white wheat cast a shadow on upside movement, traders said. The decline in prices was seen as a sign U.S. prices will have to stay competitive with cheaper priced foreign origins, traders added.


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