April 16, 2008

 

US Wheat Review on Tuesday: Profit-taking, rains weigh on markets

 

 

U.S. wheat futures closed mixed amid late profit-taking and pressure from bearish forecasts for rain in the Plains, traders said.

 

Chicago Board of Trade May wheat slipped 1/4 cent to US$8.95 3/4 per bushel. Kansas City Board of Trade May wheat dropped 1/2 cent to US$9.50 1/4, and Minneapolis Grain Exchange May wheat rose 1/2 cent to US$12.32 1/2.

 

Traders took money off the table heading toward the close after the markets rose early in the day session, a CBOT floor trader said. Rallies in the neighboring CBOT corn and soybean markets and a new record high in crude oil lent early support, traders said.

 

Weakening prices at the KCBT also pressured CBOT wheat a bit, a market analyst said. KCBT was slumping on expectations that more precipitation will hit hard red winter wheat areas during the next week, he said.

 

"The updated weather model maps would indicate pretty decent rainfall coverage in a large swatch the driest areas," the analyst said.

 

In the news, Kazakhstan imposed a ban on wheat exports until Sept. 1, and there was a report that Ukraine suspended grain exports in early April. The announcements helped underpin early gains in the markets, an analyst said.

 

 

Kansas City Board of Trade 

 

Profit-taking and talk about more rain in HRW wheat areas pulled KCBT wheat futures lower, traders said. Two storm systems are expected to bring rain to winter wheat areas of the U.S. Plains in the next week or so, said John Dee, president of Global Weather Monitoring.

 

Dry areas of western Texas and Oklahoma may see moisture from the second system, slated to move into the Plains on Monday or Tuesday next week, Dee said. Sunshine and warm temperatures should favor hard red winter wheat, he said.

 

An improvement in the U.S. Department of Agriculture's winter wheat rating was expected and didn't have a major impact on the market, a trader said. The USDA said 47% of the winter wheat crop was in good-to-excellent condition as of April 13, up from 45% as of April 6.

 

"We didn't see much improvement," one trader said.

 

 

Minneapolis Grain Exchange 

 

Nearby MGE May wheat ended slightly firmer after tumbling the 60-cent limit Monday. The July contract closed 10 cents higher on spreading, a floor trader said.

 

Planting of spring wheat, traded at the MGE, is 8% complete, compared to 6% last year and the five-year average of 12%. Spring wheat is seeded in the U.S. northern Plains.