March 14, 2008

 

US Wheat Review on Thursday: Finishes lower on profit-taking pullback

 

 

U.S. wheat futures sank Thursday as traders booked profits following a strong rally earlier in the week, analysts said.

 

Chicago Board of Trade May wheat slid 38 1/2 cents to US$12.44 per bushel. Kansas City Board of Trade May wheat closed down 36 3/4 cents at US$12.91 1/2, and Minneapolis Grain Exchange May wheat finished down 33 1/2 cents at US$14.83 1/4.

 

There was room for the markets to pull back as prices had climbed for the previous three days, traders said. CBOT May wheat traded as low as US$10.81 per bushel Monday and as high as US$13.13 Wednesday.

 

Prices rose earlier in the week on money flows and renewed fears about tight old-crop supplies. The U.S. Department of Agriculture on Tuesday said 2007-08 ending stocks had dropped from the previous month.

 

"The profits from Monday's low to yesterday's high on the week were just so handsome," said Tim Hannagan, analyst for Alaron.

 

Activity was highly volatile during the day session, with the markets shaking off overnight weakness to temporarily trade higher before pulling back. CBOT July wheat on the screen scored a new contract high of US$12.72 3/4, topping the previous high of US$12.70 set Wednesday.

 

Despite the setback, wheat futures are still expected to post solid gains for the week, Hannagan said. CBOT May wheat is already up US$1.39 on the week.

 

Weekly U.S. wheat export sales were seen as weak, Hannagan said. Net old crop export sales of 210,100 tonnes were 51% below the previous week and 9% under the prior four-week average, the USDA said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures ended lower on profit-taking, a floor trader said. The markets felt early strength from solid gains in CBOT soybeans and corn and from rallies in outside crude oil and gold markets, he said.

 

Moving forward, traders don't want to be short, or sold, wheat futures amid lingering concerns about the quality of the new crop, Hannagan said. Condition ratings for hard red winter wheat, traded at the KCBT, were poor before the crop went into dormancy last fall due to dryness in the U.S. Plains. The wheat industry hopes the crop will rebound to help rebuild ending stocks.

 

"How can you be short?" Hannagan asked. "You're breaking dormancy, and you have to grow one of the most sought-after crops in US history."

 

 

Minneapolis Grain Exchange

 

MGE wheat futures slipped lower with CBOT and KCBT. Traders took money off the table, although there are ongoing fears about shrinking old-crop supplies of spring wheat, traded at the MGE, a floor trader said. New-crop spring wheat futures also remain nervous about a battle for acreage with corn and soybeans, an analyst said.