US Wheat Review on Tuesday: Slips on lack of strong outside direction

 

 

U.S. wheat futures drifted lower Tuesday on a lack of strong direction in outside markets, but Chicago Board of Trade May wheat held a key support level, analysts said.

 

CBOT May wheat futures dropped 4 1/4 cents to US$5.01 3/4. Kansas City Board of Trade May wheat lost 1 3/4 cents to US$5.45 1/4, and Minneapolis Grain Exchange May wheat shed 6 cents to US$5.89 1/4.

 

Outside markets such as equities and crude oil remained the dominant factor for the grains, a CBOT floor analyst said. The markets did not see "as much of a bounce as you'd think we'd see" following a sell-off Monday, said Tom Leffler, owner of Leffler Commodities.

 

The grain markets tanked Monday on spillover pressure from weakness in outside markets and strength in the U.S. dollar, traders said. The dollar temporarily traded higher during Tuesday's session, which was seen as bearish because it makes U.S. wheat less competitive on the world export market.

 

Wheat opened higher Tuesday in a bounce from Monday's "overdone" slide before slipping, a CBOT floor trader said. CBOT May wheat hit an open outcry session high of US$5.09 1/2.

 

It was encouraging for bulls that CBOT May wheat held a technical support level around US$4.99 1/2, said Louise Gartner, analyst for Spectrum Commodities. The contract's open outcry session low was US$4.99.

 

"I'm coming away from my bearish status," Gartner said. "We've got down to supports [levels] and we've pounded them pretty hard and we're holding."

 

Outside markets should continue to have a strong influence on the grains amid jitters about the economy, analysts said. Further losses in equities could apply more pressure to commodities, they said.

 

"The stock market is always that thing out of left field," Gartner said. "If wheat can hold off, then you can pretty safely say that we've carved out our seasonal lows."

 

Commodity funds sold an estimated 2,000 contracts at the CBOT.

 

 

Kansas City Board Of Trade

 

Concerns about dryness in the U.S. Plains remain fundamentally supportive, traders said. Rain is forecast for the hard red winter wheat belt late next week, but the "potential event is more than a week away and not imminent," T-Storm Weather said in an update to its daily forecast.

 

Texas wheat was rated 63% poor to very poor, up from 58% the previous week, according to the National Agricultural Statistics Service. Oklahoma's crop was rated 42% poor to very poor, up from 36% a month earlier, it said.

 

KCBT May wheat hit an open outcry session high of US$5.51 and a session low of US$5.41 1/2.

 

 

Minneapolis Grain Exchange

 

Trading was choppy after Monday's slide and amid choppiness in outside markets, traders said. Volume was on the light side, they said.

 

"It's pretty darn quiet," an analyst said.

 

MGE May wheat hit a session low of US$5.87 1/2 and a session high of US$5.98 3/4.