US Wheat Review on Tuesday: Falls on spillover selling, profit-taking

 

 

Spillover pressure from weak neighboring and outside markets dragged U.S. wheat futures lower Tuesday.

 

Chicago Board of Trade March wheat fell 7 3/4 cents to US$5.84 3/4 a bushel. Kansas City Board of Trade March wheat dropped 6 3/4 cents to US$6.15, and Minneapolis Grain Exchange March wheat stumbled 3 cents to US$6.62 1/2.

 

"When you look at corn and beans, I think wheat was pulled lower by those two," said Dale Durchholz, analyst for Agrivisor. "The US$4 break we've had in crude oil has come in and really been a drag across the grains."

 

Wheat should continue to be a "follower of other markets" in the near term, Durchholz said. There was profit-taking following gains Monday, a trader said. Commodity funds sold an estimated 2,000 contracts at the CBOT.

 

In a larger sense, wheat was continuing to correct after a rally into the new year, Durchholz said. CBOT March wheat in open outcry trading climbed from a low of US$4.71 on Dec. 5 to a high of US$6.45 on Jan. 6.

 

"I think we're probably getting ready here to see wheat slip lower and get somewhat below last week's low to complete what I think arguably is a correction off that early January peak," Durchholz said. "Then we'll see where we're at."

 

CBOT March wheat last week hit an open outcry low of US$5.49. The contract's session low Tuesday was US$5.80.

 

 

Kansas City Board of Trade

 

There continued to be market chatter about a lack of rain in hard red winter wheat areas of the U.S. Plains, traders said. Precipitation on Tuesday won't do much to ease growers' concerns about dryness, according to World Weather Inc.

 

"Over the past 90 days, moisture deficits have become quite impressive from south-central Kansas into Texas," World Weather said in a forecast. "The region will be closely monitored for potential problems this spring."

 

Traders talked about the potential for export demand to shift to U.S. from Argentina, where drought has slashed production. Argentina's short crop "does divert the business," an analyst said, noting Brazil may look to the U.S. and Canada to fill its needs.

 

 

Minneapolis Grain Exchange

 

MGE wheat saw more modest losses than the other two exchanges. March wheat ended above its session low of US$6.55 1/2.

 

Tight supplies of spring wheat continue to underpin the nearby contract, an analyst said. The March-May spread widened to close at 8 cents, compared to 5 1/2 cents Monday. May wheat settled 5 1/2 cents lower at US$6.54 1/2.

 

In other news, Agriculture and Agri-Food Canada said it expected farmers this spring to plant 23.895 million acres of wheat, with durum accounting for 5.609 million acres. Producers in 2008 seeded 25.009 million acres to all wheat types, including 6.030 million of durum.