March 24, 2007

 

US Wheat Review on Friday: Slumps on CBOT corn pressure, funds

 

 

U.S. wheat futures stumbled to a lower close Friday amid fund selling and spillover weakness from the neighboring corn market, floor traders said.

 

Chicago Board of Trade May wheat ended 5 1/2 cents lower at US$4.61 1/2 per bushel, the contract's lowest close since March 19. Kansas City Board of Trade May wheat finished 2 1/4 cents lower at US$4.84 3/4, and Minneapolis Grain Exchange May wheat closed down 4 1/4 cents at US$5.01 1/2.

 

Trading was choppy and thin for most of the day session amid the fund selling and a lack of fresh inputs, traders said.

 

Market participants continue to bide their time ahead of the March 30 release of the U.S. Department of Agriculture's estimates on U.S. planting intentions and grain stocks. There also was little fundamental news to push prices higher, so there was no incentive for traders to jump into the markets, an analyst said.

 

Wheat should see some position evening next week ahead of the report's release, the analyst added.

 

During the day session, funds sold an estimated 1,500 contracts at CBOT. In pit trades, Tenco sold 500 May, while Man Financial, UBS and USA Trading each sold 200 May. Man Financial and RJ O'Brien sold 200 July. Goldenberg Hehmeyer, Rosenthal and US Trading bought 200 May.

 

Wheat watched movements in the CBOT corn market and slumped on pressure from its declines, a floor trader noted. Bear market spreading in corn pressured its old-crop contracts, he said.

 

Looking at wheat's fundamentals, recent export business has looked "routine," a floor trader said. On the weather front, T-Storm Weather reported heavy rain in the U.S. corn belt was looking unfavorable for wheat there. Still, CBOT traders said those concerns did not play into the market yet.

 

On Friday afternoon, the Commodity Futures Trading Commission is scheduled to release its commitments of traders report for the week ended March 20.

 

 

Kansas City Board of Trade

 

KCBT saw some light inter-market spreading in "extremely light trading volume," a floor trader said. Traders bought Kansas City and sold Chicago, he said.

 

"It just looked like we were bleeding lower," he said. "Trade was anemic as per the rest of this week. We've just been sitting and waiting for Friday's report."

 

Fundamental support for wheat is hard to come by as weather conditions for U.S. hard red winter wheat continue to look favorable, which is bearish for prices, an analyst said. DTN Meteorlogix reported rain was on tap for the weekend in the southern Plains, which will be good for wheat and soil moisture.

 

 

Minneapolis Grain Exchange

 

Trading volume was low throughout the day as declines in CBOT corn pulled wheat futures lower, a MGE floor trader said.

 

"There's really not a whole lot of interest out there," he said. "We were just weaker because of the bear spreading in the corn going on. It just dragged everything down."

 

In other news, the Canadian Wheat Board, meanwhile, left unchanged its monthly price projections for most grades of wheat that will be sold during the upcoming 2007-08 crop year, which begins Aug. 1. The CWB noted U.S. winter wheat crop conditions have significantly improved from the year-ago level.