US Wheat Review on Tuesday: Slips on big supplies, unsurprising data

 

 

Bearishness about large wheat ending stocks weighed on U.S. wheat futures Tuesday as the markets retreated from gains.

 

Chicago Board of Trade March wheat ended down 1 3/4 cents, or 0.4%, at US$4.82 1/4 a bushel. Kansas City Board of Trade March wheat dropped 5 1/2 cents, or 1.1%, to US$4.90. Minneapolis Grain Exchange March wheat lost 6 cents, or 1.2%, to US$5.05 3/4.

 

Prices drifted lower after the U.S. Department of Agriculture, in its monthly supply and demand report, raised its 2009-10 U.S. ending stocks estimate to 981 million bushels from its January estimate of 976 million. The increase was "not really a shock but it wasn't a bullish" change, an analyst said.

 

The USDA left its forecast for total U.S. wheat exports unchanged from last month and raised the estimate for wheat imports. Overall, traders said there was little to get excited about.

 

"There was no reason for anyone to step into the fray and want to be a buyer," said Dale Durchholz, analyst for AgriVisor.

 

Large old-crop stocks are "unequivocally bearish," but "there is limited reason to think prices will move significantly lower," according to a note from JP Morgan. Speculative funds are heavily short in CBOT wheat futures and options, which implies "limited further sales pressure," the firm said.

 

Late short-covering and technical buying at CBOT helped the market pare losses, a trader said. CBOT March wheat ended down 1 3/4 cents. CBOT March wheat closed above its session low of US$4.76 3/4.

 

 

Kansas City Board of Trade

 

KCBT March wheat closed near its session low of US$4.88.

 

Prices weakened in a turnaround from Monday's strength, traders said. The market sagged even though the USDA raised its forecast for hard red winter wheat exports by 10 million bushels from January and cut its estimate for HRW wheat carryout by 10 million.

 

HRW wheat, used to make bread, is grown in the central and southern Plains. When the crop breaks dormancy, it should benefit from snow storms bringing moisture to the area, traders said.

 

 

Minneapolis Grain Exchange

 

MGE March wheat touched a session low of US$5.01 3/4.

 

The USDA decreased its estimates for hard red spring and durum wheat by 5 million bushels each from last month and raised its carryout for each class by 5 million bushels.

 

Traders are looking ahead to planting of HRS wheat, which is grown in the northern U.S. Plains and used to make bread. There is uncertainty about how much will be planted after producers cut winter wheat plantings sharply from last year.