April 24, 2008

 

US Wheat Review on Wednesday: Falls on technicals, world crop, ukraine

 

 

Technical weakness, expectations for a bumper world crop, and Ukraine's return to the world export market shoved down U.S. wheat futures Wednesday, traders said.

 

Chicago Board of Trade July wheat fell 34 1/2 cents to US$8.31 1/2 per bushel. Kansas City Board of Trade July wheat dropped 39 1/2 cents to US$8.72 1/2, and Minneapolis Grain Exchange July wheat slid 34 1/4 cents to US$9.74 3/4.

 

The losses were "in line with the momentum and the trend" of the wheat markets, said Louise Gartner, analyst for Spectrum Commodities. CBOT July wheat, which represents the new crop, has dropped more than US$4.40 from its high last month.

 

"You've got a big crop coming," Gartner said. "You don't have any weather problems."

 

In India, for example, local wheat purchases for the crop marketing year that started in April might exceed the government's target of 15 million tonnes due to strong production, the farm minister said. Such a large purchase by state-run agencies would negate the need for further imports by the country and could leave an adequate reserve for next year, he said.

 

News that Ukraine removed all restrictions on the export of grain was "definitely bearish" as the move opens up the Black Sea region for export business, an analyst said. Kazakhstan, which has said it will suspend wheat exports through the summer, may not be far behind in lifting its restrictions, Gartner said.

 

Commodity funds sold an estimated 2,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

KCBT wheat futures pulled back amid a lack of spillover support from neighboring markets, a floor trader said. Wheat rose Tuesday on the back of gains in CBOT corn and wheat, he said.

 

Ideas for an increase in global production are bearish as growers worldwide expanded wheat seedings in response to high prices, analysts said. The winter wheat harvest is approaching in the northern hemisphere, and the new supplies should ease tight ending stocks, they said.

 

"You're five weeks away from the harvest in the United States," Gartner said.

 

 

Minneapolis Grain Exchange

 

MGE wheat is a follower of the other wheat markets amid a lack of fresh inputs, a floor trader said. The trend is down, and MGE has pretty much become a "non-factor" for the moment, he said.

 

Northern Plains spring wheat areas will have increasing rainfall and much cooler weather the next few days, DTN Meteorlogix said in a forecast. This should help recharge soil moisture for the upcoming planting season but will slow fieldwork.