US Wheat Review on Tuesday: Drops on US rain forecasts, weak demand

 

 

U.S. wheat futures dropped Tuesday on forecasts for rain in the dry U.S. hard-red-winter-wheat belt and bearishness about weak demand, analysts said.

 

Chicago Board of Trade May wheat sank 14 1/4 cents to US$5.35 per bushel. Kansas City Board of Trade May wheat lost 16 cents to US$5.88, and Minneapolis Grain Exchange May wheat tumbled 10 1/4 cents to US$6.29.

 

Expectations for rain in the U.S. central and southern Plains were seen as bearish as the HRW belt has been struggling with dryness. Significant precipitation is increasingly likely to benefit the driest portions of the region this week, with another chance for precipitation seen next week, T-Storm Weather said in an update to its daily forecast.

 

Weak export demand also weighed on CBOT wheat, said John Kleist, broker and analyst for Allendale. U.S. wheat is considered overpriced compared to wheat from Russia and the E.U., traders said.

 

CBOT May wheat has struggled above US$5.50 lately due to weak export demand, Kleist said. "Wheat will stay on the defensive as long as demand stays limp as long as world supplies stay ample," he said.

 

Technical weakness added pressure to prices, Kleist said. Bears recently have been "able to successfully defend against major moving average resistance" as CBOT May wheat has traded above its 50-day moving average without closing above it, he said. Commodity funds sold an estimated 3,000 contracts at the CBOT, traders said.

 

 

Kansas City Board of Trade

 

KCBT wheat led the downside on forecasts for rain in the Plains, traders said. HRW wheat, traded at the KCBT, is used to make bread.

 

"Meaningful totals" of precipitation will fall late this week across the driest parts of the belt in western Kansas and Oklahoma, T-Storm Weather said. The wet pattern is likely to continue across the central U.S. through at least the first week of April, the firm said.

 

"Once we knock on the door, letting the rain into the drier areas, many times the door stays open and we're going to be letting some other rains through," Kleist said.

 

 

Minneapolis Grain Exchange

 

MGE wheat stumbled lower with the other markets. There was not much support from outside markets, as stocks were lower and the dollar was higher, a trader said. A strong dollar makes U.S. grain less attractive to foreign buyers.

 

Talk continued to focus on excessive wetness in parts of North Dakota, including crop areas around the Red River Valley, a trader said. Rail shipments between Fargo, N.D., and points north could be delayed by one to four days due to flooding problems, although officials warned the situation is still changing rapidly.