March 13, 2007

 

US Wheat Review on Monday: Ends lower under spillover corn pressure

 

 

U.S. wheat futures settled lower Monday under pressure from weakness in the neighboring corn market and without any fresh supportive inputs to bounce prices, analysts said.

 

Chicago Board of Trade May wheat finished 5 3/4 cents lower at US$4.70 3/4 per bushel. Kansas City Board of Trade May wheat ended down 4 3/4 cents at US$4.97 1/4, and Minneapolis Grain Exchange May wheat closed 3 3/4 cents lower at US$5.10 3/4.

 

Wheat continued to look to the neighboring corn market for direction during the day session, said Louise Gartner, analyst with Spectrum Commodities. She noted growing conditions for wheat look "pretty good" so far and there are not a lot of big concerns to push prices higher.

 

Expectations for large U.S. and global wheat production this year also are putting downward pressure on prices, Gartner added.

 

"By itself, wheat doesn't have a whole lot to stand on," Gartner said.

 

In the Southern Plains, winter wheat areas had weekend rainfall of up to one inch, DTN Meteorlogix said. The start of this week brings continued showers, primarily in Oklahoma and north-central Texas, the weather firm noted.

 

"Temperatures have been warm recently, which has encouraged wheat to break dormancy in the region," the firm reported. "Conditions will cool notably by the end of the week to below-normal temperatures. However, there is no stressful early-spring cold weather in store."

 

In CBOT pit trades, Fimat bought 1,000 May. There was pressure from fund selling of an estimated 1,000 contracts.

 

Looking ahead, Gartner said wheat will likely continue to be tied to corn as long as corn supplies are tight. U.S. farmers are expected to plant millions more acres of corn this spring, largely at the expense of soybeans, to meet strong demand for ethanol.

 

Market participants are eagerly anticipating the March 30 release of the U.S. Department of Agriculture's report on planting intention and grain stocks. A trader said he expected trading to be choppy until the report comes out.

 

The USDA on Monday reported 19.911 million bushels were inspected for export in the week ended March 8. Analysts had predicted inspections would be in the range of 17 million to 22 million, and the news was not seen to have an affect on trading.

 

For the current market year to date, 674.426 million bushels have been inspected for export, compared to 790.802 at this time last market year.

 

In other news, Argentina's 06-07 wheat sales totaled 8.805 million metric tonnes as of March 9, according to the Agriculture Secretariat's latest data. By that time last year, Argentina had sold 5.15 million tonnes of 05-06 wheat.

 

Elsewhere, rains and strong winds over the past few days are feared to have damaged India's wheat crop in a few areas of northern provinces such as Punjab, Haryana and Rajasthan, scientists and industry officials said Monday. The exact extent of the damage isn't known, and scientists say massive damage to the standing wheat crop can still be avoided if the weather changes.

 

 

Kansas City Board of Trade

 

Volume was fairly light at KCBT, and movements in the CBOT corn market were the dominant influence on prices, a floor trader said.

 

"Basically, it's the same story," the trader said. "We're following corn."

 

There was some inter-market spread trading between KCBT and CBOT, although the action wasn't enough to push prices in either direction, he said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures were "just searching for some direction at the bottom of the range" during the day session, a floor trader said. There was limited commercial pricing, he noted.

 

Overall, volume was light, the trader said.