US Wheat Review on Wednesday: Retreats from gains on profit-taking

 

 

U.S. wheat futures Wednesday retreated from three-month highs and closed sharply lower as traders booked profits.

 

Chicago Board of Trade March wheat dropped 30 1/4 cents to US$6.13 1/4 per bushel. Kansas City Board of Trade March wheat sank 33 cents to US$6.37, and Minneapolis Grain Exchange March wheat fell 20 1/2 cents to US$6.64.

 

The markets were due for a break following a rally Tuesday that was "overdone," a broker said. Prices have been in an uptrend for the past month, with CBOT March wheat Tuesday ending up more than US$1.70 from its Dec. 5 low.

 

"There was a lot of overbuying yesterday," said Tim Hannagan, an analyst for Alaron. "Wheat had an unusually sharp gain yesterday."

 

Willing sellers appear to have come into the market as CBOT March wheat approached US$6.50, which had been seen as a resistance level, an analyst said. The contract hit a session high of US$6.45 in open outcry trading Tuesday.

 

Spillover pressure from losses in CBOT corn and soybeans added pressure to wheat, Hannagan said. Corn and soybeans sank on profit-taking and expectations for rain in dry growing areas of South America.

 

"Wheat is still kind of in a followers' role to corn and beans," Hannagan said.

 

Concerns that cold weather could damage U.S. winter wheat next week could provide underlying support to wheat in the near term, Hannagan said. Snow cover, which protects dormant winter wheat from frigid conditions, is lacking in many areas of the Midwest and Plains, according to Cropcast Agricultural Weather.

 

The lack of snow cover "is of increasing concern with an extreme cold event looming later next week," Cropcast said in a forecast. "Snowfall during the week ahead looks most likely across the areas already with plenty of snow," adding protection only to southern Michigan and parts of Ohio.

 

Soft red winter wheat, traded at the CBOT, is grown in the eastern Midwest. It is used to make pastries and snack foods.

 

 

Kansas City Board of Trade

 

KCBT wheat was due for a correction after recent gains, traders said. March wheat ended at its open outcry session low of US$6.37.

 

In other news, Egypt's state-owned General Authority for Supply Commodities said after the close of trading it will tender Thursday to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment Feb.1-10 on a free-on-board basis. GASC usually tenders for that amount and buys more.

 

 

Minneapolis Grain Exchange

 

Profit-taking and spillover pressure weighed on MGE wheat, traders said. Losses in CBOT soybeans and in crude oil were bearish influences, they said.

 

MGE March wheat trimmed losses after hitting a session low of US$6.52 1/2. The contract's session high was US$6.83 1/2.

 

The U.S. Department of Agriculture at 8:30 a.m. EST Thursday is slated to issue its weekly export sales report. Analysts expect wheat export sales for the week ended Jan. 1 to be 200,000 tonnes to 500,000 tonnes.