US Wheat Review on Tuesday: Ends lower in correction to rally

 

 

U.S. wheat futures closed lower Tuesday in a correction to Monday's rally and amid sentiment that large supplies will continue to keep a lid on prices.

 

Chicago Board of Trade May wheat ended down 9 1/2 cents, or 1.8%, at US$5.05 3/4 per bushel. Kansas City Board of Trade May wheat lost 10 cents, or 1.9%, to US$5.09 1/2. Minneapolis Grain Exchange May wheat sank 9 3/4 cents, or 1.8%, to US$5.18 3/4.

 

The markets were due for a setback because Monday's gains were overdone, traders said. The rally provided a selling opportunity amid bearishness about large supplies and lagging demand, they said.

 

"From a fundamental basis, it's still a market that's extremely hard to get fired up about," said Jason Britt, president of Central States Commodities.

 

U.S. supplies are considered burdensome, and there is tough competition for export business because of ample world supplies. There was a lack of fresh demand news out Tuesday, traders said.

 

Commodity funds sold an estimated 4,000 contracts at CBOT.

 

Nearby CBOT March wheat pulled back after closing above US$5 on Monday. It seems as though wheat keeps "getting turned back" at that price level, Britt said. March wheat ended down 9 1/2 cents, or 1.9%, at US$4.91 3/4.

 

 

Kansas City Board of Trade

 

KCBT wheat retreated from Monday's gains in a "Turnaround Tuesday" scenario, traders said. Strength in the U.S. dollar and losses in CBOT corn, crude oil and precious metals added to the bearish tonnee.

 

Wheat led the downside of the grains and soy by percentage. CBOT corn and soy each ended down about 1%.

 

"Right now, to me, it's still kind of the weak sister on the board," Britt said of wheat.

 

 

Minneapolis Grain Exchange

 

MGE March wheat was under pressure all day with the CBOT and KCBT. Ending stocks are ample enough to absorb smaller crops in the upcoming 2010-11 marketing year, traders said.

 

The Canadian Wheat Board pegged 2010-11 world production at 651 million tonnes, down from 677 million tonnes in 2009-10. It estimated Canada's 2010-11 crop at 24 million tonnes, compared with 27 million in 2009-10.