April 3, 2007

 

US Wheat Review on Monday: Closes down on corn but off session lows

 

 

U.S. wheat futures on Monday ended weaker but off session lows as the neighboring corn market moved off limit-down levels, traders and analysts said.

 

Chicago Board of Trade May wheat finished 10 cents lower at US$4.28 per bushel, Kansas City Board of Trade May wheat ended 11 cents lower at US$4.45 1/2, and Minneapolis Grain Exchange May wheat closed 3 1/2 cents lower at US$4.81 1/2.

 

Heavy spillover selling from CBOT corn has been pressuring wheat since the U.S. Department of Agriculture on Friday released estimates that showed U.S. farmers intend to sow more corn than expected this spring, analysts said. The estimates were contained in the agency's prospective plantings report, which it released along with a grain stocks report.

 

Corn opened Monday's day session at limit down, or 20 cents lower, on follow-through buying from the reports but eventually trimmed losses a bit and allowed wheat to do the same, the analysts said.

 

There also was some friendly chatter that wheat may see fresh export business after its recent declines, added Jason Britt, broker and analyst with Central State Commodities.

 

"We're getting fairly competitive down in this level," Britt said.

 

Now that the trade has had time to digest the USDA reports a bit, they also have realized that they are not overly bearish for wheat, analysts said.

 

The USDA pegged all-wheat seeded area at 60.303 million acres, compared to an estimate of 59.750 million and the 57.344 million planted in 2006. Winter wheat area was put at 44.505 million acres, above the average estimate of 43.982 million. Last year's seedings were 40.575 million.

 

Seedings for other spring wheat acres came in at 13.808 million, compared to estimates of 13.676 million and 2006 seedings of 14.899 million. Durum wheat intended acreage, meanwhile, was pegged at 1.990 million acres, versus the trade estimate of 1.977 million acres and last year's figure of 1.870 million.

 

The USDA pegged wheat stocks as of March 1 at 856 million bushels, while the trade estimate was 881 million bushels. In March 2006 stocks were 972 million bushels and last quarter stocks were 1.315 billion bushels.

 

Looking ahead, analysts said they would not be surprised to see a bounce in prices this week after CBOT May wheat closed down 23 cents on Friday.

 

"If you dig into those wheat numbers, there was nothing to say 'Oh my gosh, we need to be down 20 cents or 25 cents,'" Britt said.

 

In other news, weekly U.S. wheat export inspections were within trade expectations.

 

The USDA reported inspections totaled 16.638 million bushels for the week ended March 29, while analysts had predicted inspections in the range of 14 million to 19 million. For the current marketing year to date, export inspections were 721,091, compared to inspections of 832,709 at the same time last marketing year, according to the USDA.

 

 

Kansas City Board of Trade

 

KCBT wheat futures followed CBOT corn, a floor trader said.

 

"As soon as corn broke through being limit down, that allowed us to move up," he said.

 

In the U.S. Southern Plains hard red winter wheat areas, forecasts for cooler weather are also seen as a little friendly, the trader said. The temperatures expected on Thursday and Friday are "fairly close to freezing," he said.

 

The influx of cooler weather is "not really a big concern," Britt said. Still, "a market, after it has been beat up, it's willing to look for anything that could be a little bit friendly," he said.

 

Widespread rainfall of more than one inch took place in the Southern Plains during the past weekend, according to DTN Meteorlogix. It was "very favorable moisture" for the crop in its post-dormancy development phase, the weather firm said.

 

The USDA's weekly U.S. crop progress reports will resume for the season on Monday. The national reports will be issued at 4 p.m. EDT (2000 GMT) every Monday through late November by the USDA's National Agricultural Statistics Service.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures were watching CBOT wheat, which was watching CBOT corn, a floor trader said. There was "decent" commercial buying at the close, he said.

 

In other news, feedstock supplies are not expected be an issue with increased biodiesel production in western Canada, but the emerging industry will need to focus on quality and developing the necessary infrastructure, panelists said Monday at the Canada Grains Council annual meeting in Winnipeg.