May 1, 2008

 

US Wheat Review on Wednesday: Closes mixed as Minneapolis Grain Exchange resists slide

 

 

U.S. wheat futures closed mixed Wednesday, as tight supplies of hard red spring wheat helped the Minneapolis Grain Exchange resist a slide seen in other markets.

 

Chicago Board of Trade July wheat dropped 7 1/2 cents to US$8.01 per bushel. Kansas City Board of Trade July wheat fell 6 cents to US$8.42, while MGE July wheat closed up 1 1/4 cents to US$9.38.

 

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

 

"Wheat's a mess," said one CBOT floor trader. "It's the end of the month and a lot of money is moving on."

 

After a brief rally following soybeans and corn, "liquidation pushed down wheat at the end of the day," the trader said.

 

The market still has downside potential, but "it's not more than 30 cents," said Jason Ward, an analyst with Northstar Commodities. "We're rounding down the bottom."

 

Cheap U.S. wheat will drive the export market and "global demand will start to increase," Ward said.

 

 

Kansas City Board of Trade

 

KCBT traders continue to watch weather forecasts. Winter wheat is more than a third headed in Oklahoma and Texas, and just starting to head in Colorado and Kansas, raising moisture demands significantly, Cropcast Agricultural Weather said.

 

"Right now, the dryness in the Texas and Oklahoma panhandles is of greatest concern, but this dryness expands northward through western Kansas and eastern Colorado as well."

 

Potential rain during the next 10 days could improve soil moisture in some areas, but it looks like Texas and Oklahoma fall outside of the forecast precipitation paths, Cropcast said, predicting yield decline in areas that miss May showers.

 

 

Minneapolis Grain Exchange

 

While the new crop of hard red winter wheat will soon be available, users of the hard red spring wheat must continue to stretch their already-tight supplies, said Dave Marshall, an independent marketing consultant. The premium that MGE wheat contracts trade to KCBT wheat contracts is reflective of that shortage, he said, adding the situation will become more pronounced if wet and cold conditions delay plantings, further thinning rations.

 

"Delayed plantings make the old crop of hard red spring wheat that much more valuable," Marshall said. "You could make a case they'll get down to the last barrel."