January 19, 2007

 

US Wheat Review on Thursday: Finishes lower; weakness seen in corn

 

 

U.S. wheat futures ended lower after the neighboring corn market showed weakness during the day session and opened the door for sellers, sources said.

 

Chicago Board of Trade March wheat ended 6 cents lower at US$4.71, as Minneapolis Grain Exchange March wheat finished down 1/2 cent at US$5.01 1/2.

 

CBOT corn is the leader of the grains, and wheat has been trailing its price movements, traders noted. Corn futures opened firmer, dragging wheat along into positive territory, a floor trader said.

 

But corn soon trimmed it gains and pushed wheat lower, the trader added.

 

"Corn is the driver," said Sid Love, analyst with Kropf & Love Consulting.

 

There was further pressure from fund selling of an estimated 1,000 contracts, a CBOT floor broker said.

 

Weak fundamentals also weighed on wheat futures, sources added. Export business continues to be sluggish, and growing conditions are favorable, they noted.

 

The U.S. Department of Agriculture on Friday is slated to release weekly export sales for the week ended Jan. 11. The release was delayed a day because of the holiday on Monday.

 

A survey of analysts by Dow Jones Newswires showed estimates for sales range from 250,000 to 600,000 tonnes. A week earlier, sales were 244,400 tonnes.

 

"We haven't really seen a lot of demand in wheat," Love said. "I think there's wheat available around the world."

 

As for the weather, a winter storm system that will cover the Southern Plains between Thursday and Sunday promises to bring moderate-to-heavy snow to the region, the DTN Meteorlogix weather firm reported. Moisture from the snow will be good for wheat, the firm noted.

 

The DTN Meteorlogix forecast calls for snow totals of four inches or more likely through western Texas and the Texas Panhandle, along with central and northern Oklahoma from this coming storm system. The snow may reach as far north as southern Kansas, the firm said.

 

Midwest areas will have light snow during the next three to five days, Meteorlogix added.

 

In CBOT pit trades, Fimat bought 300 March and sold 300 March. Man Financial bought 300 July and sold 200 March. JP Morgan sold 300 May.

 

 

Kansas City Board of Trade

 

KCBT wheat saw light volume trade as market participants took a step back after recent volatility, a floor source said. Still, price movements were tied to CBOT corn, he added.

 

When corn showed weakness after a stronger start, wheat futures headed for the downside, the source said.

 

"There's no fundamental support for wheat," he said. "All we had was corn."

 

Slow export sales and favorable growing conditions are negative for wheat futures prices, he noted. Weaker crude oil also was bearish, he said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures followed CBOT corn, a floor source said.

 

"We're pretty much captive to corn at these high prices," he said.

 

Talk about new-crop wheat being used for feed spread among traders, he noted. However, it seems too early in the season to pencil in the new crop as feed grain, the source added.

 

Overall, volume was moderate to light, the source noted.