March 15, 2008

 

US Wheat Review on Friday: Drops on profit-taking, spillover pressure

 

 

U.S. wheat futures slipped Friday on profit-taking and spillover pressure from losses in other markets, traders said.

 

Chicago Board of Trade May wheat closed down 52 1/2 cents at US$11.91 1/2 per bushel, up 86 1/2 cents on the week. Kansas City Board of Trade May wheat ended down 31 1/2 cents at US$12.60, up 91 cents on the week. Minneapolis Grain Exchange May wheat dropped 33 1/2 cents to US$14.49 3/4, up US$1.30 on the week.

 

Traders booked profits after a run-up earlier in the week. They wanted to take money off the table ahead of the weekend and amid ideas that the U.S. has priced itself out of the world market, analysts said.

 

"Today is Friday, and there's nothing really bullish out there," an analyst said. "There's nobody willing to own it up here. It turns into a cascade."

 

Commodity funds sold an estimated 3,000 wheat contracts at the CBOT. There were also sharp losses in CBOT corn and soybeans.

 

There was uncertainty in the markets as U.S. equities tumbled after the Federal Reserve approved an arrangement to provide emergency funds to investment bank Bear Stearns, analysts said. Jitters about the strength of the U.S. economy sparked liquidation, they said.

 

Private analytical firm Informa Economics raised its estimate for 2008-09 wheat plantings, which was seen as bearish. The firm pegged 2008-09 wheat planted acreage at 63.5 million acres, up from the 60.4 million planted by U.S. farmers in 2007, according to the U.S. Department of Agriculture.

 

Winter wheat planted acreage was estimated at 47.04 million acres, up from the 46.6 million acres the firm estimated in January. Spring wheat planted acreage was estimated at 13.886 million acres compared to Informa's previous estimate of 12.0 million acres. Durum wheat planted acreage for 2008 was estimated at 2.6 million acres.

 

 

Kansas City Board of Trade

 

KCBT wheat futures fell in a setback from high prices amid a lack of fresh news, a floor trader said. Traders wanted to book profits as the neighboring CBOT corn and soybean markets slumped and as U.S. equities tanked, he said.

 

There are expectations that prices will fall hard once the world winter wheat crop gets harvested. Planting around the world is thought to have expanded significantly due to high prices.

 

"Things are going to ease up on the supply side in the next couple months," an analyst said.

 

Southern Plains winter wheat areas will receive some rains in the next five days, with a mixed outlook regarding precipitation, DTN Meteorlogix said. It looks more likely that southern and east-central areas will benefit more from precipitation during the next five days than will the northwestern Plains, the private weather firm said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures followed CBOT wheat and neighboring markets lower, traders said. Strong gains earlier in the week opened the door for profit-taking, and no one wanted to stand in front of the retreat, they said.