April 12, 2007

 

US Wheat Review on Wednesday: Ends down on corn; awaiting freeze info

 

 

U.S. wheat futures finished modestly lower Wednesday as declines in the neighboring corn market weighed on prices, traders and analysts said.

 

Chicago Board of Trade May wheat closed 1 1/2 cents lower at US$4.56 1/4 a bushel, Kansas City Board of Trade May wheat ended down 1 1/2 cents at US$4.76, and Minneapolis Grain Exchange May wheat finished down 2 3/4 cents at US$5.05.

 

Wheat futures were watching activity in the CBOT corn markets as the trade waited to find out more information about freeze damage done to the U.S. winter wheat crop during the weekend, a CBOT floor trader said. Although anecdotal reports have indicated damage was widespread, traders are looking for "more quantifiable" information, he added.

 

There also are ideas the crop may be able to bounce back from the potential damage, analysts said.

 

"You will not know about the actual size of the wheat crop until you drive in with the combine," said Sid Love, analyst with Kropf & Love Consulting.

 

Winter wheat plantings also were up this year over last year, so the crop can absorb some loss, an analyst said. Looking ahead, wheat traders will continue to closely watch weather developments, he said.

 

The Plains should see up to 1 1/2 inches of rain and snow during the latter part of this week, according to DTN Meteorlogix.

 

"As cold as it is now, I would not want to discount a cold spell in May," Love said. "You do that and you're really going to do some damage" to the crop.

 

The U.S. Department of Agriculture on Tuesday is slated to release its weekly export sales date. Analysts surveyed by Dow Jones Newswires predicted wheat sales would range from 200,000 to 450,000 metric tonnes.

 

Funds bought an estimated 1,000 contracts at CBOT. In CBOT pit trades, Rand Financial bought 400 Dec, while Fimat bought 300 May. UBS spread 800 July/May.

 

 

Kansas City Board of Trade

 

KCBT wheat futures closed lower in a bit of a correction from gains Tuesday, a floor trader said. On Tuesday, KCBT May wheat closed up 9 1/2 cents at US$4.77 1/2.

 

Funds were moderately active trading the May/July spread, the trader said.

 

Market participants are waiting for producers' to determine the extent of damage from the weekend freeze, he said. Those results will give the market direction, he added.

 

"Until then, we'll kind of be bouncing around," the trader said. "If we come in tomorrow and they're saying the freeze looks pretty bad, then we'll be up another 10 cents certainly."

 

 

Minneapolis Grain Exchange

 

MGE wheat futures followed CBOT corn to the downside, a floor broker said. There is also a feeling that, even with freeze damage over the weekend, the U.S. wheat crop is in pretty good shape, he added.

 

The USDA reported Monday that 64% of the winter wheat crop was in good-to excellent condition as of April 8, down from 71% as of April 1. Ten percent of the crop was rated in poor-to-very poor condition, up from the 6% in that category a week earlier. The USDA estimated 26% of the total crop was in fair condition, up from 23% a week earlier.

 

MGE volume was good early but thinned out by the end of the session, the broker said. There was some inter-market activity, with traders seen buying MGE and selling KCBT, he said.