US Wheat Review on Friday: Slips on profit-taking after rally

 

 

Ideas that a rally Thursday was overdone and easing concerns about a drought in China nudged U.S. wheat futures lower Friday, analysts said.

 

Chicago Board of Trade March wheat slipped 4 3/4 cents to US$5.57 a bushel, down 11 cents on the week. Kansas City Board of Trade March wheat dropped 3 1/2 cents to US$5.86 1/2, down 14 1/2 cents on the week. Minneapolis Grain Exchange March wheat settled down 1 cent at US$6.54 3/4, up 2 3/4 cents on the week.

 

The markets pulled back amid profit-taking after closing about 20 cents higher Thursday, analysts said. Fears about dryness in China helped support Thursday's gains, but the markets can only get so much mileage out of the drought concerns, said Jim Gerlach, president of AC Trading.

 

It seemed as though there was "a major 180" degree turn on worries about China, said Joe Victor, vice president of marketing for Allendale.

 

"Some of that very bullish enthusiasm that we began the week with kind of went out with a whimper by the end of the week," he said.

 

China's ending stocks - what's left over after supply and demand are accounted for - are large enough to sustain domestic demand even if farmers end up with a short crop, analysts said. Irrigation and wheat's natural heartiness also may prevent a major crop failure, they said.

 

Strength in CBOT soybeans helped underpin wheat, traders said. March soybeans ended up 21 cents at US$10.01.

 

 

Kansas City Board of Trade

 

Traders continued to watch forecasts for rain in dry areas of the U.S. southern Plains. Rain and snow are expected to impact "all hard red wheat areas at one time or another" from Sunday to Wednesday, with another storm system possible late next week into the following weekend, World Weather Inc. said in a forecast.

 

The rains should help relieve dryness in parts of Texas, Oklahoma and western Kansas, although more moisture will be needed, an analyst said. Winter wheat is dormant until spring.

 

 

Minneapolis Grain Exchange

 

MGE wheat closed slightly lower but felt some underlying support from a lack of farmer selling and ideas that supplies of hard red spring wheat are "tight," a market analyst said. The U.S. Department of Agriculture at 8:30 a.m. EST Tuesday is slated to issue updated estimates on 2008-09 U.S. wheat ending stocks.

 

The average of analysts' estimates for wheat ending stocks is 649 million bushels, down a hair from the USDA's January estimate of 655 million, according to a Dow Jones Newswires survey of 12 analysts. Ending stocks of hard spring wheat in January were pegged at 160 million bushels, according to the USDA.

 

There should be some positioning in front of the report, a trader said.