April 1, 2008

 

US Wheat Review on Monday: Nearby CBOT, Minneapolis Grain Exchange fall limit On USDA, soy

 

 

U.S. wheat futures fell hard Monday, with nearby Chicago Board of Trade and Minneapolis Grain Exchange contracts ending limit down on a bearish government stocks estimate and pressure from soybeans, analysts said.

 

CBOT May wheat closed limit down, or 60 cents lower, at US$9.29 per bushel. Kansas City Board of Trade May wheat ended down 57 1/4 cents at US$9.65, and Minneapolis Grain Exchange May wheat was 60 cents lower at US$11.94.

 

The U.S. Department of Agriculture pegged wheat stocks as of March 1 at 710 million bushels, while the average of analysts' pre-report estimates was 668 million. The government's forecast also was above the highest estimate in a Dow Jones Newswires pre-report survey.

 

"If I had to put my finger on one thing that starts to take the edge off the wheat market, it's the creep higher in the stocks," said Jason Britt, broker and analyst at Central State Commodities. "You're eventually going to get those stocks back up to a workable number."

 

Limit-down losses in the CBOT soy complex added heavy pressure to wheat, traders said. Soybeans tumbled on a higher-than-expected plantings estimate from the USDA.

 

The USDA's plantings estimates for wheat were not considered too surprising, although they were slightly higher than expected, traders said. All wheat plantings were pegged at 63.803 million acres, above the average analyst estimate of 63.625 million and up from 60.433 million in 2007.

 

"I looked through the plantings numbers, (and) nothing stands out" for wheat, Britt said.

 

Commodity funds sold an estimated 3,000 contracts at the CBOT.

 

The daily trading limit for CBOT wheat futures Tuesday will jump to 90 cents from 60 cents. The limit will remain 60 cents at the KCBT and MGE.

 

 

Kansas City Board of Trade

 

KCBT wheat futures were more reluctant to trade limit down than CBOT and MGE wheat amid concerns about the condition of hard red winter wheat, a floor trader said. There are worries about dryness in wheat-growing areas of the western Plains, he said.

 

"We cannot have any blurbs on the radar as far as wheat right now," the trader said. "We need to have a weather premium built in there, and we're going to keep it in Kansas City."

 

The larger-than-expected USDA estimates for quarterly stocks and all-wheat acreage were seen as bearish, traders said. Short covering helped the market trim losses, they said.

 

Winter wheat plantings were pegged at 46.840 million, up from 44.987 million in 2007. The average of analysts' estimates was 46.986 million.

 

 

Minneapolis Grain Exchange

 

Nearby MGE May wheat was limit down at the close but wasn't trading synthetically lower, a floor trader said. The USDA's forecast for quarterly stocks was the biggest factor for the decline, he said.

 

Plantings of spring wheat, traded at the MGE, are pegged at 14.333 million acres this year, above the average analyst estimate of 14.147 million. Last year, spring wheat was planted on 13.297 million acres, according to the USDA.