March 8, 2008

 

US Wheat Review on Friday: Tumbles on profit-taking, spillover

 

 

Profit-taking and spillover pressure from neighboring markets shoved U.S. wheat futures sharply lower Friday, traders said.

 

Minneapolis Grain Exchange May wheat closed limit down, or 60 cents lower, for the fifth consecutive day as the market continued to pull back from high prices.

 

Chicago Board of Trade May wheat ended down 20 cents Friday at US$11.05 per bushel, up 19 cents on the week. Kansas City Board of Trade May wheat was 13 1/2 cents lower at US$11.69, up 9 cents on the week. MGE May wheat finished 60 cents lower at US$13.19 3/4, down US$3 on the week.

 

CBOT soybeans, soyoil and corn all finished limit down amid speculative selling and long liquidation. The losses in the neighboring markets weighed on wheat futures, traders said.

 

"It's kind of hard to have wheat rally when you have corn and soybeans (with) limit-down closes," said Dave Marshall, an independent marketing advisor and commodities broker. "The ag commodities have been well-favored by the funds. With liquidation in one market, any other market becomes vulnerable too."

 

Commodity fund selling pressured all the CBOT agricultural futures. The funds sold an estimated 3,000 wheat contracts at the CBOT.

 

There was not much fresh news out for the wheat markets to feed on, traders said. Market participants took money off the table in wheat ahead of the weekend and after a recent run-up to record highs, a CBOT trader added.

 

Next week, the wheat markets will continue to look to other markets for direction, Marshall said. Traders will also keep an eye on weather in India, where dryness has been a problem in some key production areas, he said.

 

The U.S. Department of Agriculture next week will release new estimates for carryout in its March supply and demand report. The report, due out at 8:30 a.m. Tuesday, is not expected to be a big deal for the wheat markets, traders said.

 

Some analysts predicted a decline in U.S. carryout due to steady export demand, but others said the USDA probably won't make changes until after it releases the quarterly grain stocks report March 31. The average of trade estimates for carryout is 263 million bushels, down from 272 million in February, according to a Dow Jones Newswires survey of 14 analysts.

 

 

Kansas City Board of Trade

 

The limit-down moves in the CBOT soy complex and in corn pressed KCBT wheat futures into negative territory, traders said. Traders booked some profits, and there was a lack of fresh news, they said.

 

Precipitation in the Southern Plains is still stuck in eastern Texas, leaving the rest of the Plains, especially to the west, mostly dry, DTN Meteorlogix. Showers in the east may linger until Monday, but conditions will be drier Tuesday, the private weather firm said. Central and north Texas and the Panhandle may see some light precipitation Sunday or Monday, according to Meteorlogix.

 

 

Minneapolis Grain Exchange

 

MGE May wheat closed limit down for the fifth consecutive day. The contract is pulling back on weakening cash prices and in a retreat from high prices, traders said. MGE July wheat also finished limit down.

 

Deferred months also were sharply lower but felt some support from a continuing battle for acreage in the U.S. northern Plains, an analyst said. Spring wheat, traded at the MGE, is competing for acres with corn and soybeans.