US Wheat Review on Wednesday: Backpedals from Tuesday's rally

 

 

Profit-taking and a firm U.S. dollar weighed on U.S. wheat futures Wednesday as the markets corrected from Tuesday's rally.

 

Chicago Board of Trade March wheat ended down 10 1/4 cents, or 2%, at US$4.94 3/4 per bushel. Kansas City Board of Trade March wheat sank 10 1/2 cents, or 2%, to US$5.02. Minneapolis Grain Exchange March wheat dropped 9 1/2 cents, or 1.8%, to US$5.11.

 

The markets gave back some of Tuesday's gains amid profit-taking and ideas the rally was overdone. CBOT March wheat on Tuesday climbed 18 1/2 cents, or 3.8%, to a four-week high.

 

Strength in the U.S. dollar weighed on prices Wednesday after a weak dollar underpinned gains Tuesday, traders said. A soft dollar is often seen as supportive because it encourages the appetite for risk and makes U.S. grain look more attractive to foreign buyers.

 

Wheat's supply and demand storyline is unsupportive because supplies are large and there is competition for export business. Tuesday's gains made U.S. wheat less competitive on the world export market, a CBOT floor trader said.

 

After the close of trading, Egypt's state-owned wheat buyer, the General Authority for Supply Commodities, issued a snap tender for wheat, a trader said. Egypt is a major buyer on the world wheat market and is known for being price sensitive.

 

Commodity funds sold an estimated 4,000 contracts at CBOT. CBOT March wheat finished near its session low of US$4.92 1/2.

 

 

Kansas City Board of Trade

 

KCBT March wheat settled near its session low of US$4.99 but managed to close above the psychologically important price of US$5.

 

There was a lack of fresh news for the market to trade on, said Tom Leffler, owner of Leffler Commodities. Winter wheat is expected to have plenty of moisture to restart growing when it breaks dormancy soon, he said.

 

"I'm looking for the wheat crop to come out of the winter looking pretty decent," he said.

 

 

Minneapolis Grain Exchange

 

MGE March wheat finished near its session low of US$5.07. The market pulled back with other grains after rallying Tuesday.

 

Traders are waiting to hear U.S. acreage estimates from the U.S. Department of Agriculture's Agricultural Outlook Forum, which runs Thursday and Friday. The government will issue initial projections for spring planting at the conference.

 

The USDA's weekly U.S. export sales report, typically issued Thursdays, will be delayed a day this week due to the Presidents Day holiday.