US Wheat Review on Friday: Drops on profit-taking, no supportive lead

 

 

U.S. wheat futures dropped Friday, lacking the fundamental impetus to rally into the weekend in the absence of stronger support from neighboring or outside markets.

 

Chicago Board of Trade May wheat dropped 6 3/4 cents to US$5.18 1/4 per bushel. The contract traded in a 10 3/4-cent range, topping at US$5.27. July wheat lost 6 1/2 cents to US$5.30 3/4. KCBT May wheat fell 6 cents to US$5.70. MGE May wheat slipped 8 1/2 cents to US$6.09 1/4.

 

Speculative funds sold an estimated 2,000 CBOT wheat contracts, according to midday estimates.

 

Forecasts of rain in some of the Southwestern Plains states may be a part of the challenges wheat faces Friday, "but the more important factor is the Dow [Jones Industrial Average] is down today after a big week; also, it's Friday," said Dale Durchholz, an AgriVisor senior market analyst.

 

The pressure on wheat was linked to rain, an absence of equities leadership and end-of-the-week profit-taking, Durchholz said.

 

"We've gotten to a place where people look to the outside markets and trade accordingly," Durchholz said.

 

"That's were we'll stay until proven otherwise."

 

Durchholz said he will be watching fund money flows in the agricultural commodities for a signal investors are ready to capitalize on inflation.

 

Private analytical firm Informa Economics on Friday estimated all 2009 wheat plantings at 59.7 million acres and other spring wheat plantings at 14.077 million acres, according to CBOT floor traders.

 

Informa pegged 2009 corn plantings at 81.4 million acres and soybean plantings at 81.5 million acres, according to traders.

 

The trade awaits the U.S. Department of Agriculture's prospective plantings report for additional ideas about U.S. grain and soy supply in 2009. The report is due for release March 31 at 8:30 a.m. EDT.

 

 

Kansas City Board of Trade

 

Showers in the Southwestern Plains over the past week have mostly focused to the east of the main hard red winter wheat-growing areas and there is little near-term rain left to fall, according to CropCast Agricultural Weather.

 

"The best relief has certainly occurred in southern Oklahoma, eastern Kansas, and central and eastern Texas," the private meteorological firm said. "However, showers have been very light or non-existent further to the north & west... [where wheat] will continue to encounter stress on spring growth."

 

"This is an increasing concern in western Texas in particular, as jointing will likely become quite widespread by month's end in that area due to the warm pattern anticipated."

 

 

Minneapolis Grain Exchange

 

Hard red spring wheat lost a little of its premium to CBOT wheat Friday.

 

"We're still continuing to digest the crop report," said Austin Damiani, a Frontier Futures broker. "The USDA is reminding us there's a lot of wheat around. It's in farmers bins, but the selling comes, it's going to come heavy."

 

Damiani said the 40% stocks-to-use ratio projected Wednesday by the USDA was the highest among all wheat classes, which helped tighten the premium MGE hard spring wheat contracts held over Chicago soft red wheat prior to the updated supply and demand report.

 

March MGE wheat contracts expired at a 20 3/4-cent premium to the nearby May contracts.

 

Despite the heavy on-farm supply deliverable stocks remain tight in Minnesota, Damiani said.