US Wheat Review on Monday: Falls on dollar, equities, demand

 

 

U.S. wheat futures stumbled Monday as plunging equities and a stronger dollar weighed, traders said.

 

May Chicago Board of Trade wheat ended down 18 1/2 cents at US$5.04 1/2 per bushel, and July wheat ended down 18 1/2 cents at US$5.16 1/4.

 

Kansas City Board of Trade May wheat ended down 10 cents at US$5.59, and Minneapolis Grain Exchange May wheat ended down 9 3/4 cents at US$6.26.

 

The market has little of its own supportive news, traders said, as demand remains weak. Monday's direction was dictated by outside influences, as equities fell sharply. Monday's dip was fueled by "momentum-type trade," an analyst said.

 

"A bit of fear seems like it's creeped back into these markets a little bit," says Jason Britt, president of Central State Commodities.

 

Britt said the CBOT market should have support at US$5.10 in the July contract and then at US$5.

 

A CBOT floor trader said he didn't think US$5 would prove to be significant psychological support. He noted that demand is weak, which was highlighted by Egypt's purchase of Russian and French wheat last week. He said it was unclear where the next business for the U.S. would come from.

 

"I think we'll break until we find more demand, but we're only halfway there," he said.

 

An analyst added that weather was "non-threatening," especially for hard red winter wheat.

 

Traders also noted profit-taking Monday on the wheat-corn spread following trade late last week.

 

 

Kansas City Board of Trade

 

KCBT wheat's losses were less drastic, as views remain mixed about damage from recent cold weather in the southern U.S. plains. Many expected a slight decline in the portion of the crop rated good to excellent in the USDA's crop progress report, although an analyst said it was tough to predict.

 

"It's hard to say with the freezes," a floor analyst said. "Even now, we don't have a good handle on it."

 

The weather is now relatively benign for winter wheat, other analysts said, with warming temperatures.

 

 

Minneapolis Grain Exchange

 

Traders expect the crop progress report to show little or no progress in spring wheat planting due to wet weather.

 

An analyst said that spring wheat would likely have to be the leader of the wheat markets if they are to rally, with "trouble getting the crop in the ground as the catalyst.