April 22, 2008

 

US Wheat Review on Monday: Slides on technicals, weather, canada

 

 

Technical weakness, talk of improved crop weather and a forecast for increased wheat plantings in Canada pressured U.S. wheat futures Monday, traders and analysts said.

 

Chicago Board of Trade July wheat fell 25 1/2 cents to US$8.59 1/2 per bushel. Kansas City Board of Trade July wheat shed 25 cents to US$9.08, and Minneapolis Grain Exchange July wheat tumbled 40 cents to US$10.05.

 

Wheat futures are in a technical downtrend and have bearish momentum after recent setbacks, including a steep slide Friday, analysts said. There was follow-through selling Monday after Friday's "very shaky performance," said Jerry Gidel, analyst for North America Risk Management Services.

 

Expectations that U.S. winter wheat areas will see favorable weather also weighed on the markets, traders said. Soft red winter wheat regions of the Midwest and Delta should benefit from warmer and drier conditions after a period of persistent wetness, they said.

 

Expectations for an increase in world wheat production in general continue to press on the prices, traders said. The Northern Hemisphere's impeding winter wheat harvest has shifted the markets' focus to ideas of increasing supplies from concerns about tight old-crop stocks, they said.

 

"The market is just slowly creeping into harvest time," Gidel said.

 

Statistics Canada pegged all-wheat plantings at 25.109 million acres this year, up from 21.617 million last year. The increased forecast was interpreted as bearish, although it was within trade expectations of 22.8 to 27.5 million acres, traders said.

 

Egypt's state-owned General Authority for Supply Commodities said after the close that it will tender Tuesday to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment in June on a free-on-board basis, an official said Monday. Results of the tender should help give wheat direction Tuesday, although the markets remain stuck in a downtrend, an analyst said.

 

Commodity funds sold an estimated 1,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

Rains are expected to increase across the U.S. Plains again this week. The drier sections of the HRW wheat belt, including the Texas & Oklahoma Panhandles, have the potential for moisture, Cropcast Weather Services said.

 

The U.S. Department of Agriculture is expected to increase good-to-excellent ratings for the whole winter wheat crop in its weekly progress report, due out at 4 p.m., traders said. Last week, the crop was rated 47% good to excellent.

 

 

Minneapolis Grain Exchange

 

Statistics Canada projected spring wheat plantings at 16.584 million acres, up from 15.214 million last year. The increase was "pretty much within expectations," a MGE floor trader said.

 

U.S. spring wheat planting is expecting to be 10% to 20% complete in the weekly crop progress report, traders said. A week ago, seeding was 8% complete.