US Wheat Review on Tuesday: Sags on spillover pressure, ample supply

 

 

U.S. wheat futures weakened Tuesday ahead of the release of government crop data amid pressure from other markets and bearishness about large supplies.

 

Chicago Board of Trade May wheat ended down 5 1/2 cents, or 1.1%, at US$4.89 1/2 per bushel. Kansas City Board of Trade May wheat lost 4 1/2 cents, or 0.9%, to US$4.97 1/2. Minneapolis Grain Exchange May wheat fell 2 1/4 cents, or 0.4%, to US$5.11 1/4.

 

The markets continued to feel pressure from "an abundant supply and weakness in European wheat" prices, said Greg Wagner, senior commodity analyst at AgResource Co. U.S. and world wheat supplies are ample, and there is stiff competition for export business in the world market.

 

Egypt's state-owned wheat buyer, the General Authority for Supply Commodities, said Tuesday it was tendering to buy up to 120,000 tonnes of wheat on a free-on-board basis for shipment May 16-31. Egypt, a top buyer known for being price-sensitive, has overlooked the U.S. lately in tenders and bought wheat from the Black Sea region and Europe.

 

Losses in neighboring CBOT corn helped lead wheat lower, traders said. Corn and wheat are linked because both are used for animal feed.

 

Commodity funds sold an estimated 3,000 wheat contracts at the CBOT.

 

 

Kansas City Board Of Trade

 

Traders are keeping an eye on the U.S. winter wheat crop as it resumes growing after going dormant for the winter. Four percent of Kansas' winter wheat was jointed as of Sunday, above the five-year average of 1% and none last year, according to the National Agricultural Statistics Service. Twenty percent of the state's wheat was breaking dormancy, compared with 4% a week earlier.

 

"There doesn't seem to be any concern regarding wheat breaking dormancy down south, despite the fact that it's a little bit wet," Wagner said. "It's a little bit early to push the panic buttonne on anything."

 

 

Minneapolis Grain Exchange

 

MGE wheat gained on the CBOT and KCBT.

 

There was positioning in the markets ahead of the release of the U.S. Department of Agriculture's March supply/demand report, a trader said. A prereport survey by Dow Jones Newswires showed analysts expect the USDA to cut its estimate for U.S. wheat ending stocks 10 million bushels from last month to 971 million bushels. That would keep supplies at a comfortable level, traders said.