March 19, 2009

 

US Wheat Review on Wednesday: Profit-taking pares gains from earlier in week

 

 

Profit-taking pressured U.S. wheat futures Wednesday as the markets pulled back from rallies earlier in the week.

 

Chicago Board of Trade May wheat fell 22 1/2 cents to US$5.30 a bushel. Kansas City Board of Trade May wheat lost 22 1/4 cents to US$5.83, and Minneapolis Grain Exchange May wheat sank 20 1/4 cents to US$6.18 3/4.

 

Market participants booked profits amid sentiment that gains Monday and Tuesday were overdone, a CBOT trader said. CBOT May wheat was up 34 1/4 cents on the week as of Tuesday's close.

 

Wheat "was probably more at risk and vulnerable to some profit-taking simply because supplies seem to be so large," said Dave Marshall an independent marketing advisor and commodities broker.

 

The U.S. Department of Agriculture last week raised its forecast for 2008-09 world wheat carryout to 155.85 million tonnnes from its February estimate of 149.96 million tonnnes. It raised its estimate for U.S. carryout to 712 million bushels from the February estimate of 655 million.

 

News that Egypt booked 200,000 tonnnes of Russian wheat and none from the U.S. "poisoned the atmosphere" in the wheat markets, Marshall said. The snub was not surprising but reminded traders that U.S. wheat is priced too high to be competitive on the global export market, a CBOT trader said.

 

 

Kansas City Board of Trade

 

KCBT wheat tumbled in a retreat from the gains Monday and Tuesday, traders said. Egypt wasn't expected to buy U.S. wheat, but it was a disappointing reminder of the competition for export business and of substantial world supplies, they said.

 

"It wasn't a 55,000- or 60,000-metric-tonnne sale," a broker said. "A 200,000-tonnne sale is a pretty sizable sale. It's a reminder that [Russians] do have wheat."

 

Traders continue to keep an eye on dryness in the U.S. southern Plains amid concerns about potential crop losses. Very little significant precipitation was in the DTN Meteorlogix outlook for the driest sectors of the region through the next 10 days.

 

"With the [warm] temperatures that we have, it's kind of an unnerving type of situation," a broker said. "It's still too early to be dramatically worried."

 

 

Minneapolis Grain Exchange

 

There continued to be chatter about the possibility that flooding in the Red River Valley this spring could delay spring planting. At least 1 million acres of North Dakota farm land may go unplanted, a U.S. Farm Service Agency official.

 

In other news, traders will watch for weekly U.S. export sales data, due at 8:30 a.m. EDT Thursday. U.S. wheat export sales for the week ended March 12 are expected to be 200,000 to 550,000 tonnnes, analysts said.