February 8, 2006

US Wheat Review on Tuesday: Finishes lower on weaker corn, soy

U.S. wheat futures ended lower Tuesday in two-sided trade as earlier light fund buying evaporated with spillover weakness from soybeans and corn, helping turn modest gains into losses late in the session, sources said.

Light fund buying, talk of the beginning of the "Goldman roll" and firm KCBT wheat futures provided support to both CBOT and MGE futures early in the session, a floor analyst said.

CBOT March wheat dropped 3 1/4 cents to US$3.51 3/4 per bushel, KCBT March fell 4 1/2 cents to US$4.13, and MGE March wheat slipped 2 cents to US$4.02.

"The hard red winter wheat crop ratings were terrible so it was a little bit of a surprise to see wheat move lower on the day," said Vic Lespinasse, of AG Edwards & Sons. However, outside markets were sharply lower and that weakness kept a lid on the grain markets, he added.

Several futures markets were sharply lower on Tuesday, with heavy losses posted in crude oil, gold, silver and several other commodities.

A number of hard red winter states released monthly crop condition ratings that continue to report the impact that excessively dry conditions have had on the crop in the Southern Central Plains. Kansas' wheat crop is now rated 52% good-to-excellent compared to 63% last month, Oklahoma reported 10% of its hard red crop was in good-to-excellent shape compared to 41%, and Texas reported that 1% of its crop was rated in good-to-excellent condition compared to 17% last month.

In CBOT trades, ABN Amro bought 500 March, Fimat bought 300 March, Man Financial bought 400 December and 300 March, Rand bought 500 March and the Refco division of Man Financial bought 200 March. JP Morgan sold 200 March, Fimat sold 500 March, Rand Financial sold 200 May, and the Refco division of Man Financial sold 600 July.

Commodity fund selling was estimated at 1,000 contracts at the CBOT.

In global wheat news, Iraq is expected to announce the results of its tender for up to 1 million metric tonnes of optional origin wheat Wednesday. The announcement has been previously delayed.