US Wheat Review on Tuesday: Stumbles on spillover pressure

 

 

Weakness in neighboring markets pulled U.S. wheat futures lower Tuesday, although demand expectations and crop concerns provided underlying support, analysts said.

 

Chicago Board of Trade March wheat fell 11 1/4 cents to US$5.52 1/2 a bushel. Kansas City Board of Trade March wheat lost 12 cents to US$5.81, and Minneapolis Grain Exchange March wheat dropped 3 1/2 cents to US$6.43.

 

Wheat followed CBOT soybeans and corn lower, as the row crops sank on wet weather in dry areas of Argentina, traders said. It is "hard to separate" wheat from weakness in soybeans and corn, said Larry Glenn, a broker and analyst for Frontier Ag.

 

CBOT March wheat closed near its session low of US$5.51, the lowest price for a contract since Jan. 20. The contract spent most of the day session trading within Monday's range but fell below Monday's low on late selling.

 

Sentiment that the U.S. will see a pickup in export demand helped underpin wheat, Glenn said. Iraq and Bangladesh are looking for wheat in tenders, according to traders.

 

Egypt's state-owned General Authority for Supply Commodities, or GASC, said it was tendering Wednesday to buy 55,000 to 60,000 metric tonnes of wheat, on a free-on-board basis, for shipment March 1-10. GASC has bought a cargo of U.S. soft red winter wheat in each of its past two tenders.

 

The results of GASC's tender will help give the market direction Wednesday, a trader said. Market participants will look at a breakdown of bids to see how competitive U.S. wheat is with the rest of the world, he said.

 

"I think the hopes for demand are helping out the bullish traders, or at least maybe stopping the bears from getting too aggressive in the selling," Glenn said.

 

 

Kansas City Board of Trade

 

KCBT wheat felt pressure from sinking CBOT soybeans and from concerns about the weakness of the U.S. economy, a trader said. March wheat closed at its session low.

 

Concerns about dryness in the U.S. Plains lent some support to the market, a trader said. Hard red winter wheat in parts of Kansas, Oklahoma and Nebraska should see rain Sunday and Monday, said Joel Widenor, a meteorologist for Cropcast Agricultural Weather.

 

The areas will need even more rain than that to make up for winter dryness, Widenor said. Most areas should receive about 1/2 to 1 inch of rain, he said.

 

 

Minneapolis Grain Exchange

 

MGE wheat closed a few cents lower but resisted the double-digit losses seen at the CBOT and KCBT. March wheat closed above its session low of US$6.40.

 

Tight supplies of hard spring wheat, traded at the MGE, are a supportive feature for the market, a trader said. Producers are unwilling to sell until prices firm up, he said.

 

March wheat closed at an 11-cent premium to May wheat. May wheat fell 7 1/4 cents to US$6.32.