April 24, 2007

 

US Wheat Review on Monday: Lower on overbought ideas, spillover

 

 

U.S. wheat futures ended lower Monday, backpedaling from recent gains on overbought ideas, spillover pressure from corn and precautionary selling ahead of Monday afternoon's crop progress report.

 

July CBOT wheat ended 8 cents lower at US$4.94, July KCBT wheat settled 9 1/2 cents lower at US$5.02, and July MGE wheat finished 4 cents lower at US$5.15.

 

The market was a bit overdone on the upside, and with good crop weather last week in the winter wheat belt, traders took the opportunity to take some profits in the event that crop ratings don't show as much of a decline as many anticipate, said Brian Hoops, president Midwest Market Solutions in Yanktonne, S.D.

 

U.S. Department of Agriculture is scheduled to release its weekly crop progress report 4:00 p.m. EDT, with analysts looking for winter wheat ratings declines in the 3 to 6 percentage point range.

 

Spillover weakness from neighboring corn futures, and the exhaustion of the speculative short covering that underpinned prices in recent weeks added to the defensive tonnee, traders said. Otherwise, futures had little supportive influences, with lower than expected weekly export inspections and a quiet news front failing to attract buyers, traders added.

 

Nevertheless, lingering concerns over crop damage and dryness concerns for Australia, Ukraine and Russia remain underlying features to keep a floor under prices, analysts added.

 

The DTN Meteorlogix Weather Forecasts said Southern Plains winter wheat areas had rainfall of more than 1 inch in western sectors of the region during the past weekend. Another significant round of showers and thunderstorms will fire up during Monday night through most of the day Tuesday. Rainfall of up to 2 1/2 inches is expected, with the heaviest rain in the central and eastern areas of the wheat belt. The storms and moderate to heavy rain may further stress winter wheat, and inhibit its recovery process after the hard freeze in early April.

 

Meanwhile, Ukraine and Australia wheat areas remain mostly dry, Meteorlogix reports. Ukraine had only scattered light showers last week. In Australia, just a few showers are in store during the next three days. More rain is needed ahead of winter wheat planting in Australia, Meteorlogix said in the forecast.

 

U.S. Department of Agriculture said weekly wheat export inspections for the week ended April 19 totaled 13.097 million bushels, below trade expectations of 15 million to 20 million bushels. The weekly figure is down 43.8% from the previous week's 23.309 million bushels.

 

In CBOT pit trades, buyers were lightly scattered among various commission houses. On the sell side, JP Morgan sold 300 December, Fimat and Rand Financial each sold 300 July. Speculative fund selling was estimated between 3,000 and 4,000 contracts.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures stumbled lower in slow consolidating trade. The market took the opportunity to trim some weather premium from prices, with many traders looking to Monday afternoon's crop progress report to kick start the week, a KCBT floor analyst said.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures followed Chicago and Kansas City lower in the absence of fresh news. The market did not follow the other markets on a one to one basis, but with both markets down and CBOT corn trending lower, MGE wheat drifted lower as well, analysts said. The inability of the active contracts to challenge resistance at Friday's close, attracted selling interest as well, a MGE floor trader added.