March 19, 2010

 

US Wheat Review on Thursday: Stumbles on profit-taking, firm dollar

 

 

Profit-taking and pressure from gains in the U.S. dollar knocked U.S. wheat futures lower Thursday in a setback from gains during the past two sessions.

 

Chicago Board of Trade May wheat ended down 6 3/4 cents, or 1.4%, at US$4.89 1/4 a bushel. Kansas City Board of Trade May wheat lost 7 1/4 cents, or 1.4%, to US$4.95. Minneapolis Grain Exchange May wheat sagged 5 3/4 cents, or 1.1%, to US$5.14 1/2.

 

The markets pulled back after CBOT May wheat on Wednesday rose to a 1.5-week high on short-covering in a bear market, an analyst said. Global fundamental factors for wheat remain weak because U.S. ending stocks are at a 22-year high and world stocks are at an 8-year high.

 

Wheat, which is seen as a follower, trimmed losses in late dealings as neighboring CBOT corn and soybeans shook off losses. CBOT May wheat touched a session low of US$4.84 1/2.

 

Commodity funds sold an estimated 3,000 contracts at CBOT.

 

 

Kansas City Board of Trade

 

KCBT wheat led the downside as the market gave back almost all of Wednesday's gains. KCBT May wheat hit a session low of US$4.91.

 

The fundamental outlook for wheat is unsupportive for the long term because there is simply too much wheat around, an analyst said. U.S. production is expected to decline in the upcoming 2010-11 crop year, but it will take more than one year of lower production to tighten supplies, he said.

 

"How much can you really do in one year's time to make that a bullish scenario?" he said. "It's going to take at least 2 crop years to turn that around."

 

 

Minneapolis Grain Exchange

 

MGE wheat had the mildest losses. The May contract trimmed losses a bit after hitting a session low of US$5.11.

 

Traders are waiting for the U.S. Department of Agriculture to issue its prospective plantings report March 31. It will give the market the first official estimate on plantings of hard red spring wheat, grown in the northern U.S. Plains and traded at MGE.

Some producers said they planned to plant less spring wheat than last year because of disappointing prices. Seeding typically begins in late April, but there are some worries it will be delayed by wet weather.