April 25, 2007

 

US Wheat Review on Tuesday: Mostly lower on speculative profit taking

 

 

U.S. wheat futures ended mostly lower Tuesday, with Chicago and Kansas City wheat futures posting significant losses amid speculative profit taking and a lack of fresh supportive news.

 

July CBOT wheat ended 8 cents lower at US$4.97 1/2, July KCBT wheat settled 13 1/2 cents lower at US$4.88, and July MGE wheat finished 3/4 cent higher at US$5.15 3/4.

 

The keyword for Tuesday's market was profit taking, as traders booked some profits as futures have lost upside momentum, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

The market needed to be fed some bullish input to keep buyers enthused, and with Monday's winter wheat crop ratings declines coming in lower than expected, speculative selling emerged as a featured attraction, traders said.

 

The one-percentage-point decline in winter wheat ratings is a reflection that the worst of the damage from the Easter weekend freeze has been fully factored into crop ratings, McCambridge added.

 

Without a bullish spark the market focused on profit taking, as futures consolidate from the more than 70-cent gains achieved from the first of April, traders said. Corn/wheat spreading added to the movement in wheat, with traders looking to unwind long wheat and short corn positions established in recent weeks, a trader added.

 

Meanwhile, the DTN Meteorlogix Weather forecasts said southern Plains winter wheat areas will have showers and thunderstorms over the next three days, with moderate to heavy precipitation. Winter wheat may actually undergo some stress with this rainfall, due to soil moisture already being at field capacity in much of the Southern Plains.

 

In CBOT pit trades, Citigroup bought 300 December, Rand Financial bought 300 July, and Man Financial bought 500 May, 500 July and 300 December. Man Financial sold 1,500 July, and UBS Securities sold 300 July and 200 December. Speculative fund selling was estimated between 2,000 and 3,000 lots.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures stumbled lower in relatively quiet action, with market following through on overnight declines, analysts said. The overall smaller-than-expected decline in winter wheat crop ratings served as the catalyst for the selling pressure, traders said.

 

In pit trades, volume was estimated between 12,000 and 13,000 lots, with Man Financial a buyer of 900 July and a seller of 600 July. Prudential Financial bought 500 July. Electronic volume was estimated at 6,000 lots.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended mixed, with nearby contracts managing to recover from earlier weakness on commercial buying and intermarket spreads versus Chicago and Kansas City wheat futures, a MGE floor analyst said. MGE spring wheat futures also garnered strength from supportive Stats Canada data showing wheat acres at the low end of estimates and talk of wet Canadian weather possibly leading to planting delays, McCambridge added.