May 1, 2007

 

US Wheat Review on Monday: Backpedals on end-of-month fund sales

 

 

U.S. wheat futures ended lower Monday, backpedaling on end-of-the month profit taking and the extraction of weather premium as rainfall in dry areas of Australia and Europe weighed on prices, analysts said.

 

July CBOT wheat ended 17 cents lower at US$4.95 1/2, July KCBT wheat settled 15 1/4 cents lower at US$4.86 1/2, and July MGE wheat finished 6 1/4 cents lower at US$5.29 1/2.

 

The defensive theme was consistent from the outset, with futures extending the overnight theme, traders said.

 

Rains bringing beneficial moisture to Australia and parts of European wheat areas set the stage for the losses, but the bulk of the declines were fund sponsored end-of-month position squaring, analysts say. Large speculative traders sold in Chicago, setting the tone for the entire U.S. wheat complex.

 

Large speculative sales sent prices stumbling to session lows on the close, with JP Morgan, Penson GHCO and Tenco featured sellers.

 

Otherwise, activity was relatively light, with traders looking ahead to Monday afternoon's weekly crop condition ratings while taking a precautionary approach to trading ahead of the Wheat Quality Councils tour of hard red winter wheat fields across Kansas, analysts added.

 

The Wheat Quality Council-sponsored tour begins Tuesday in Manhattan, Kan., and wraps up Thursday in Kansas City, Mo. An estimated 58 crop scouts, including representatives from the milling and baking industries, universities and the media, will survey wheat-producing areas across the state, with some also venturing into northern Oklahoma and southern Nebraska.

 

Meanwhile, the DTN Meteorlogix Weather Forecasts said Australia's major wheat-growing sector had some notable rain showers with up to one inch precipitation during the past weekend. However, the general trend in Australia's wheat country remains dry. Dry weather continues as well in Ukraine, the North China Plain, and in northern Europe. This general trend shows little sign of changing in any of the countries cited during this week.

 

Export inspections of U.S. wheat were 16.669 million bushels for the week ended April 26, the USDA reported. That was within the 13-20 million bushels expected by analysts and slightly higher than the 14.491 million bushels inspected last week. Year to date, 792 million bushels have been inspected for export, down 11.8% from the 898 million bushels inspected last year.

 

 

KANSAS CITY BOARD OF TRADE

  

KCBT wheat futures ended lower across the board in pretty routine volume, traders said. Volume picked up on the close amid end-of-month fund position squaring, but the market was filled with captive traders to Chicago, a CBOT floor broker said. Overall it was a news-less day for KCBT wheat, with everyone willing to take a step back and await the afternoon's crop ratings and reports on the start of the Kansas wheat tour, he added.

 

 

MINNEAPOLIS GRAIN EXCHANGE  

 

MGE wheat futures ended lower, in tune with the weak tone following through the U.S. wheat complex. A MGE floor analyst said activity was slow, with some late end-of-the month selling surfacing after Chicago futures fell into the close.