April 10, 2008

 

US Wheat Review on Wednesday: Markets finish mixed; seen as a follower

 

 

U.S. wheat futures Wednesday shook off early losses to close mixed on leadership from Chicago Board of Trade soybeans and corn, traders and analysts said.

 

Chicago Board of Trade May wheat ended unchanged at 9.34 per bushel. Kansas City Board of Trade May wheat finished 1 cent higher at US$9.88, and MGE May wheat settled 5 cents higher at US$13.20.

 

Wheat temporarily soared on spillover support from CBOT soybeans and corn but trimmed gains after the neighboring markets came off their highs, said Larry Glenn, owner of Glenn Commodities. Trading was volatile.

 

Wheat was "the weakest link in there, of all the grains," Glenn said. "It's been following."

 

The brief surge on borrowed strength followed heavy early losses. Wheat slumped early in the session on forecasts for rain in the U.S. Plains and expectations for a big new crop, analysts said.

 

The U.S. Department of Agriculture's April supply and demand report kept its estimate for 2007-08 U.S. wheat carryout at 242 million bushels, unchanged from March and below the average analyst estimate of 261 million. The agency pegged world wheat ending stocks at 112.5 million tonnes, up from 110.4 million in March.

 

"The world numbers were negative; the U.S. numbers were positive," Glenn said. "We kind of got a balancing act."

 

But the new USDA data didn't have a major impact on the wheat markets, a CBOT floor analyst said. Weather and activity in neighboring markets are more important factors for wheat, he said.

 

Expectations for a big upcoming global harvest also should continue to be a bearish factor for the markets, an analyst said. There are ideas that importers may try to wait until the new crop comes online and keep old-crop supplies at a minimum, he said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures felt spillover support from gains in CBOT soybeans and corn and in crude oil, a trader said. Early weakness was influenced by forecasts for moisture in dry hard red winter wheat areas of the U.S. Plains, he said.

 

While the USDA left its 2007-08 U.S. wheat carryout estimate of 242 million bushels unchanged from last month, it lowered its estimates for hard wheat carryout. Stocks of hard winter wheat were put at 101 million, down from 106 million in March, while stocks of hard spring wheat were seen at 58 million, down from 63 million in March.

 

Carryout for soft red wheat was estimated at 42 million, up from 32 million last month. Stocks of white wheat and durum were unchanged from March.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures rebounded along with CBOT and KCBT wheat after slipping early on profit-taking, a floor trader said. The USDA report didn't generate much attention, he said.

 

The USDA at 8:30 a.m. EDT Thursday will issue its weekly export sales report. Analysts said they expected to see wheat sales of 300,000 to 750,000 metric tonnes.