March 28, 2008

 

US Wheat Review on Thursday: Ends down on technical selling, positioning

 

 

Technical selling and position-squaring ahead of key government crop reports pressured U.S. wheat futures Thursday, analysts said.

 

Chicago Board of Trade May wheat fell 19 cents to US$10.14 per bushel. Kansas City Board of Trade May wheat fell 14 cents at US$10.54, and Minneapolis Grain Exchange May wheat closed down 24 1/4 cents at US$12.80 3/4.

 

Traders evened up positions before the U.S. Department of Agriculture issues estimates for prospective plantings and quarterly grain stocks. The projections are due out at 8:30 a.m. EDT Monday.

 

"I just suspect that people who have traded in this wheat market don't want to be on the wrong side should the USDA surprise anybody on Monday morning," said Dave Marshall, an independent marketing advisor and commodities broker. "There's been a lot of money that's been in and out of these markets lately. To reduce some of that risk ahead of these reports would seem to make sense."

 

Technical selling also weighed on the markets after a setback Wednesday, Marshall said. Wheat futures on Wednesday closed lower even though CBOT corn and soybeans rallied.

 

Technically, "it doesn't look like the same kind of strength we had" a few weeks ago in wheat, Marshall said. Commodity funds sold an estimated 2,000 contracts at the CBOT.

 

Prices fell even though Egypt's state-owned General Authority for Supply Commodities said Thursday it bought 180,000 metric tonnes of U.S. soft red winter wheat. Of the total, GASC purchased 120,000 tonnes in U.S. dollars on a free-on-board basis and 60,000 tonnes in a local tender to be paid for in Egyptian pounds on a free-on-truck basis, an official said.

 

 

Kansas City Board of Trade

 

KCBT traders said they are waiting for the USDA reports to be released. There was some pressure on the markets from a forecast for moisture in the U.S. Plains, a floor trader said.

 

KCBT traders watched the old crop/new crop spread, which ended with the nearby May contract again trading at a premium to the new crop July. The spread Wednesday settled with July trading at a premium to May, and some traders saw that as a sign of reduced bullishness for the market, an analyst said.

 

 

Minneapolis Grain Exchange

 

The average of analysts' pre-USDA report estimates for all wheat plantings was 63.625 million acres, up from 60.433 million last year, according to a Dow Jones Newswires survey. Winter wheat seedings were seen at 46.986 million acres, up from 44.987 million in 2007.

 

The average of analysts' pre-report estimates for U.S. seedings of spring wheat other than durum was 14.147 million acres, up from the 13.297 million acres planted in 2007. Spring wheat acres will be the focus of the plantings report for the wheat markets as winter wheat has already been planted, analysts said. Spring wheat, traded at the MGE, is battling for acres in the U.S. northern Plains with corn and soybeans.

 

"We know there's got to be some shifting around of acreage," Marshall said.