March 29, 2008

 

US Wheat Review on Friday: Closes lower on positioning ahead of USDA

 

 

U.S. wheat futures stumbled Friday as traders evened up positions ahead of the release of key U.S. Department of Agriculture reports, analysts said.

 

Chicago Board of Trade May wheat was 25 cents lower at US$9.89 per bushel, up 1 1/2 cents on the week. Kansas City Board of Trade May wheat slumped 32 3/4 cents to US$10.22 1/4, down 9 3/4 cents on the week. Minneapolis Grain Exchange May wheat finished down 26 3/4 cents at US$12.54, down 23 cents on the week.

 

The USDA is set to issue estimates for prospective plantings and quarterly grain stocks at 8:30 a.m. EDT Monday. The reports are "very much anticipated" amid uncertainty about wheat producers will seed this spring, a trader said.

 

"All the trading was positioning, posturing ahead of the report," said Tim Hannagan, analyst for Alaron.

 

The USDA's projections will give the markets direction Monday morning, analysts said. The markets should then continue to trade off the data through Tuesday and possibly until Wednesday, Hannagan said. After that, weather conditions will take center stage, he said.

 

"By Wednesday, it will be, 'It's not what you plant, it's what you grow,'" Hannagan said.

 

There was some profit-taking ahead of the weekend and before the end of the quarter, traders said. Market participants wanted to take money off the table and did not want to hold big positions going into the USDA reports, they said.

 

Weakness in outside markets like crude oil and gold added to the bearish tonnee for wheat, an analyst said. CBOT soybeans and soy products also were sharply lower.

 

Commodity funds sold an estimated 2,000 wheat contracts at the CBOT.

 

 

Kansas City Board of Trade

 

KCBT wheat futures closed in negative territory due to positioning ahead of the USDA reports and profit-taking, a floor trader said. Traders booked profits before the end of the week, end of the month and end of the quarter, he said.

 

Conditions in western areas of the Southern Plains wheat belt continue to trend drier, and soil moisture is "in need of recharge," DTN Meteorlogix said in a forecast. The weekend offers very little improvement in the situation.

 

There is some potential for significant precipitation in wheat areas during the next five to seven days, Meteorlogix said. However, the highest potential is still in the east, the private weather firm said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures focused on the upcoming USDA estimates as the other two markets did, a floor trader said. Trading activity was light going into the reports, he said.

 

The most important estimate for the wheat market will likely be the projection for spring wheat seedings, traders said. High-protein spring wheat, traded at the MGE, is planted in the spring and competes for acres with corn and soybeans.