US Wheat Review on Tuesday: Stumbles in setback from early gains
U.S. wheat futures closed lower Tuesday as an early push to the upside ran out of steam.
Chicago Board of Trade May wheat slipped 1 cent to US$5.22 1/4 a bushel. Kansas City Board of Trade May wheat lost 5 1/2 cents to US$5.64 1/2, and Minneapolis Grain Exchange May wheat fell 8 1/2 cents to US$6.29 3/4.
CBOT May wheat closed near its open outcry session low of US$5.19 and well below its session high of US$5.32 1/2.
Prices rose early on gains in neighboring markets and a decline in the government's U.S. winter wheat condition rating, said Alan Brugler, president of Brugler Marketing & Management.
"I think we were trying to chase the corn and beans higher early," he said. "We were a little skeptical all along because the condition ratings actually got better for soft red winter wheat. The bulls found out they had a lack of friends."
The U.S. Department of Agriculture rated 42% of winter wheat as good to excellent as of Sunday, down one percentage point from the previous week and five percentage points from a year earlier. Hard red winter wheat has struggled with dryness and a recent freeze, while soft red winter wheat has seen mostly favorable weather. The CBOT trades SRW wheat, and the KCBT trades HRW wheat.
There was a lack of fresh demand news, traders said. The U.S. is "already at a big price premium to everybody else," Brugler said.
Moving forward, wheat will continue to keep an eye on neighboring and outside markets, including the U.S. dollar. A firm dollar makes U.S. wheat less attractive to foreign buyers.
CBOT July wheat, which represents the new SRW wheat crop, closed down 3/4 cent at US$5.34. The contract has trendline support around US$5.10 3/4, Brugler said.
Kansas City Board of Trade
Rains headed for the U.S. hard red winter wheat belt were bearish for KCBT wheat, said Larry Glenn, broker and analyst for Frontier Ag. The belt should receive "substantial benefit later this week and weekend," including areas across north-central Kansas and south-central Nebraska, according to a forecast from T-Storm Weather.
KCBT May wheat closed near its open outcry session low of US$5.61. Its session high was US$5.76.
Minneapolis Grain Exchange
MGE wheat led the downside for the second consecutive day as inter-market spreads continued to correct, a trader said. MGE hard red spring wheat had built a strong premium over CBOT and KCBT wheat amid concerns about potential spring planting delays due to wetness in the northern Plains.
North Dakota farmers have pushed back the average expected starting date for fieldwork due to poor conditions, the National Agricultural Statistics Services said in a report. The statewide average starting date is seen at May 2, three days later than estimated a week ago and more than two weeks behind the statewide five-year average.
