Indian Tender Boosts Wheat Market

CHICAGO - Feb 10/06 - SNS -- World wheat markets finished the week's trading on a relatively high note, with the announcement of details for a tender by India to buy 500,000 metric tons (MT) of wheat this year. It is the first time since 1999 that India has imported wheat.

However, fundamental demand is only part of the price equation and analysts at the Chicago Board of Trade (CBOT) caution, "The market looks vulnerable to a setback based on the overbought technical condition of the market and a potential slowdown in fund buying for a few days into next week. The market is quite overbought but the longer term fundamentals remain bullish.

"In addition, traders seem a bit nervous that the sharp rally off of the January lows will make the U.S. 'less' competitive on the world export market, and (yesterday's) news that Egypt bought no U.S. wheat and 240,000 MT from Australia and France helped confirm these concerns. Traders remain hopeful that Iraq buys 1 million MT of wheat at their optional origin tender and that the US receives a good portion of the tender."

Corn faces similar problems. Weakness in other commodities combined with ideas that producer selling will intensify on the rally and a belief the market is overbought helped trigger the long liquidation selling in over night trading.

"The market found the fund buying support to make a run at Monday's highs, but the trade believes that the fund buying spree might slow," the CBOT analysts said. "Rumors that a prominent index fund would buy soybeans, corn and wheat this week persisted all week and when the buying emerged yesterday, sellers stepped aside."

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