April 9, 2008

 

US Wheat Review on Tuesday: Market mostly up on rebound, positioning

 

 

U.S. wheat futures closed mostly higher Tuesday in a rebound from a sharp sell-off and with traders looking ahead to a U.S. Department of Agriculture crop report, analysts said.

 

Chicago Board of Trade May wheat closed up 12 3/4 cents at US$9.34 per bushel. Kansas City Board of Trade May wheat jumped 7 3/4 cents to US$9.87, and Minneapolis Grain Exchange May wheat sank 35 cents to US$13.15.

 

CBOT wheat bounced in a "Turnaround Tuesday" scenario after falling hard Monday, a trader said. There was sentiment that Monday's losses were overdone, he said.

 

There also was positioning ahead of the USDA's April supply-and-demand report, due at 8:30 a.m. EDT Wednesday, said Alan Brugler, president of Brugler Marketing & Management. The average of analysts' estimates for 2007-08 wheat carryout is 261 million bushels, up from 242 million in March, according to a Dow Jones Newswires survey of 13 analysts.

 

There is some uncertainty about what the USDA will do, as the range for analysts' carryout estimates in the survey was 237 million to 282 million bushels, Brugler said. The markets on Tuesday were "just kind of taking a wait-and-see attitude, assuming the USDA is going to raise ending stocks but (knowing) the range is kind of wide," he said.

 

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

 

There was some scattered demand news, with Jordan announcing a tender to buy 100,000 metric tonnes of hard wheat on a cost and freight basis. The deadline for bids is April 17.

 

 

Kansas City Board of Trade

 

There was market chatter about the USDA's first weekly crop progress of the year, released after the close Monday. The agency said 45% of the winter wheat crop was in good to excellent condition, down from 64% a year earlier and 44% last autumn.

 

The condition ratings weren't too surprising as problems with dryness in the Plains were already well known, analysts said. In Kansas, the top hard red winter wheat-producing state, 44% of the crop was rated good to excellent, which Brugler said was better than he was expecting.

 

"Of course it's going to be lower than last year," Jerry Gidel, analyst for North America Risk Management Services, said of the good-to-excellent rating. "Things were looking fabulously last year."

 

Thunderstorms should initially develop in or near the Plains' driest hard red winter wheat areas Wednesday afternoon, T-Storm Weather said in an update to its daily forecast. But they are expected to quickly move north and east as dry air surges eastward from the Rockies, the private weather firm said.

 

 

Minneapolis Grain Exchange

 

MGE May wheat fell hard on profit-taking after a recent rally, a trader said. The nearby MGE contract ended Monday modestly firmer as the other markets tumbled.

 

Short-covering recently helped MGE May wheat close limit up, or 60 cents higher, for three consecutive day sessions late last week. However, it now looks as though any attempt at a "short squeeze" is over, Brugler said.