US Wheat Review on Thursday: Stumbles in setback from gains

 

 

U.S. wheat futures stumbled Thursday amid pressure from neighboring markets and in a setback from Wednesday's gains, traders said.

 

Chicago Board of Trade May wheat fell 10 3/4 cents to US$5.25 a bushel. Kansas City Board of Trade May wheat dropped 12 cents to US$5.62, and Minneapolis Grain Exchange May wheat lost 4 1/4 to US$6.08 1/2.

 

Wheat traded both sides during the session and faded into the close. The markets were unable to sustain an early attempt to rally, said Dave Marshall, an independent commodity broker and marketing advisor.

 

Weakness in CBOT soybeans and corn weighed on wheat, a trader said. Export demand is expected to be "slack" down the road, he said.

 

Weekly U.S. wheat export sales topped expectations, although they did not give the markets any reason to get overly bullish, a trader said. There is still a lot of competition for export business on the world market, an analyst said.

 

Wheat's turnaround may have been encouraged by a perception that government projections for a drop in 2009 U.S. wheat plantings were "not as important as the trade thought they were," Marshall said. The U.S. Department of Agriculture's chief economist, speaking at the agency's Annual Outlook Forum, pegged 2009 wheat plantings at 58 million acres, down from 63.1 last year.

 

"There's some reason to be somewhat skeptical," Marshall said. "It's just economists sitting around a table [who make the projections]. That makes it harder to buy into."

 

 

Kansas City Board of Trade

 

Losses in KCBT wheat erased almost all of Wednesday's gains. The May contract jumped 12 1/4 cents Wednesday.

 

Traders continue to watch forecasts for rain in dry hard red wheat areas of the U.S. central and southern Plains. Concerns about dryness are moving more to center stage as warm weather is encouraging the crop to grow, a trader said.

 

"Dryness continues across the hard red winter wheat belt through next week," T-Storm Weather said in an update to its daily forecast. "Unusual warmth remains likely next week, which will cause more wheat to break dormancy. The lack of rain is a concern, but time remains for a seasonably wetter pattern change to occur."

 

 

Minneapolis Grain Exchange

 

MGE wheat closed lower, even though the markets are oversold, a trader said. Prices pulled back after gains in crude oil helped wheat rise in early trading, he said.

 

In other news, world 2009-10 wheat output is expected to fall to 649 million metric tonnes, down 6% compared with 2008-09 estimates, the International Grains Council said. In 2008-09 world wheat production is estimated at 688 million tonnes, up 1 million tonnes from the IGC's January forecast, as a result of a better-than-expected crop from Australia.