March 20, 2007

 

US Wheat Review on Monday: Settles weaker amid lack of fresh news

 

 

U.S. wheat futures finished lower Monday as a lack of fresh news kept buyers on the sidelines in quiet, choppy trading, analysts said.

 

Chicago Board of Trade May wheat ended down 5 3/4 cents at US$4.55 per bushel, Kansas City Board of Trade May wheat finished down 7 1/2 cents at US$4.79, and Minneapolis Grain Exchange May wheat closed 5 1/2 cents lower at US$4.98.

 

Late buying in the soybean and corn markets inspired some short covering in wheat toward the end of the session, a CBOT floor analyst said. Overall, however, there were no fresh inputs to drive prices higher, he said.

 

Weather in the U.S. Southern Plains looks favorable for wheat and there was no new export business during the weekend, noted Chad Henderson, analyst with Prime Agricultural Consultants.

 

"I just think it was a combination of factors that were weighing on the market," he said.

 

Looking at the weather, a thunderstorm cluster is likely to form Monday night into Tuesday from eastern Kansas throughout southeastern Nebraska, according to a forecast from T-Storm Weather. A major rain event is then expected to develop toward the end of the week in most parts of the U.S. Central and Southern Plains, the forecast stated.

 

"This should lead to heavy rains across a majority of the region, which will be very beneficial for wheat," T-Storm said. "Any dryness concerns should end."

 

As for export business, the U.S. Department of Agriculture said U.S. wheat export inspections for the week ended March 15 were 13.528 million bushels, below trade expectations. Analysts had predicted inspections would range from 17 million to 23 million bushels.

 

For the current market year to date, 688.943 million bushels have been inspected for export, down from 804.996 million at this time last year, according to the USDA.

 

In other activity, light fund and local selling also kept prices on the defensive, traders said. Funds sold an estimated 1,500 contracts. In CBOT pit trades, Tenco bought 500 December. Fortis sold 400 May, and Fimat sold 300 May.

 

CBOT corn also ended lower, which left wheat without a leader to the upside, an analyst said.

 

Wheat futures ended higher Friday in a bounce from recent losses and on ideas that the market was technically oversold, traders and analysts said. CBOT May wheat also traded higher in e-cbot activity but could not sustain the overnight gains.

 

"Today it just all fizzled out," Henderson said about the gains.

 

Looking ahead, the attention of many market participants remains focused on the USDA's March 30 planting intentions and grains stocks report. The report is expected to show a sizable shift of U.S. farmland to corn from soybeans as producers look to take advantage of sharp demand for ethanol.

 

Until then, wheat will likely continue to look to corn for direction, an analyst said. The markets are "biding their time" until the report comes out, he added.

 

 

Kansas City Board of Trade

 

Local selling and a lack of buyers pressured KCBT wheat futures, a floor trader said. Floor activity was subdued amid the lack of fresh news, he said.

 

Export sales were disappointing and added weakness to the market, the trader said.

 

On the price chart, Henderson noted KCBT May wheat flirted with its January low of US$4.75 1/2 and looked like the "weak link" in the markets. If the contract had traded below that level, it would be "almost another 20 cents before you get to technical support."

 

 

Minneapolis Grain Exchange

 

MGE wheat futures followed weakness at CBOT and KCBT, a floor trader said. There was no fresh news out and floor activity was "very quiet," he said.

 

"There really was not much at all here," he said.

 

In other news, there will be little to no change felt by the Canadian Wheat Board when the Japanese government alters the way it allows importers to price wheat purchases, according to an official with the CWB.

 

Newswire reports Friday said that Japanese millers will no longer be looking at prices for imported wheat that stay fixed throughout the year. Instead, Japanese importers will need to be prepared for the ups and downs of market prices as the government, their dominant supplier, will allow them to purchase imported wheat at prices closer to market levels. The Japanese government, through a weekly tender process, currently bids for wheat from a variety of countries, including the U.S., Canada and Australia.