US Wheat Review on Tuesday: Sinks on pressure from outside markets

 

 

U.S. wheat futures closed lower Tuesday as pressure from outside markets overshadowed fears about damage from a spring freeze in the U.S. hard red winter wheat belt.

 

Chicago Board of Trade May wheat was down 17 1/4 cents at US$5.39 3/4 a bushel. Kansas City Board of Trade May wheat fell 13 cents to US$5.90, and Minneapolis Grain Exchange May wheat was down 7 1/2 cents at US$6.61 3/4.

 

The markets traded both sides during the day session but succumbed to spillover pressure from falling equities and crude oil prices, analysts said. Strength in the U.S. dollar was another bearish feature as it makes U.S. wheat less attractive to foreign buyers, they said.

 

"I think it's an example of we have weather vs. the macro markets," said Larry Glenn, analyst and broker for Frontier Ag. "Right now the macro markets are dominating the trade."

 

Wheat had temporarily found support from worries that a cold snap early Tuesday in the southern Plains would reduce HRW wheat yields, traders said. There are indications of damage in Oklahoma, but it will take time for producers to assess the full impact of the freeze, agronomists said.

 

Commodity funds sold an estimated 1,000 contracts, traders said.

 

 

Kansas City Board of Trade

 

Spillover pressure from weak equities and crude oil, and the firm U.S. dollar dragged KCBT wheat lower, traders said. There continue to be concerns about potential yield losses from the freeze, they said.

 

"I think the jury's still out on how much damage was done," Glenn said. "Nobody really wants to stick their neck out that much."

 

Oklahoma appears to have been hit hard because temperatures fell well below freezing in widespread areas for several hours, said Jeff Edwards, small grains extension specialist at Oklahoma State University. There could be "severe damage in most of our crop," he said.

 

Wet weather and seasonable temperatures following Tuesday morning's freeze will give crops the best possible chance to recover from damage, World Weather Inc. said in a forecast. Rain will fall abundantly across hard red wheat areas late Friday through the weekend, the private weather firm said.

 

 

Minneapolis Grain Exchange

 

MGE wheat closed lower with the other markets after briefly leading the upside during the day session. Strength at KCBT and MGE had helped boost CBOT wheat, an analyst said.

 

Traders will keep an eye on the outside markets for direction Wednesday, traders said. The U.S. Department of Agriculture is slated to issue a monthly supply/demand report Thursday, although it's not expected to include any major changes for the wheat balance sheet, they said.

 

"I don't see too much out of that report that's going to be a market mover," Glenn said.