May 2, 2007

 

US Wheat Review on Tuesday: Mostly up on speculative buys, crop concerns

 

 

U.S. wheat futures ended mostly higher Tuesday, rebounding from earlier losses on speculative buys, with confirmation of freeze damage from crop tour participants serving as the catalyst for the late turnaround, analysts said.

 

July CBOT wheat ended 5 1/2 cents higher at US$5.01, July KCBT wheat settled 1/2-cent higher at US$4.87, and July MGE wheat finished 1 1/4-cent lower at US$5.28 1/4.

 

The market staged a late bounce, managing to overcome session long weakness from improved weekly crop ratings and improved weather conditions for winter wheat crops in the plains, said Bill Nelson, associate vice president with A.G. Edwards and Sons in St. Louis, Mo.

 

The exhaustion of selling pressure and the ability of the CBOT July wheat futures to hold support at its 50-day moving average provided a technical spark to lift prices, with concerns over finding from the winter wheat tour providing a fundamental means for the gains, traders added.

 

Crop scouts surveying the condition of Kansas' wheat Tuesday as part of the annual Hard Winter Wheat Tour saw fields severely damaged by a hard Easter weekend freeze.

 

Tour participants on one leg headed west and slightly south from Manhattan, Kan., calculated a yield average of 30 bushels an acre. Of the seven fields surveyed, five had "severe damage" and were at least 30% to 40% dead, said Ben Handcock, executive vice president of the council. Last year along the same route, the full day's average was 44.5 bushels. The crop's condition deteriorated later in the season amid persistent dryness.

 

Meanwhile, the DTN Meteorlogix Weather Forecasts said rainfall of more than one inch occurred in much of central Texas north into Oklahoma Monday. Similar rainfall is in store during the next two days. The rain area is also set to expand north into southern Kansas. Winter wheat will be further stressed by this wet weather and its resulting favorable environment for rust and disease to develop, which threaten to reduce both yield and crop quality. Wheat condition ratings were basically unchanged from a week ago.

 

However, about one-quarter of the Kansas wheat crop is judged to have sustained moderate to severe damage from the freeze in early April. Soft red winter wheat areas of the eastern Midwest may have incurred even higher percentage of damage, Meteorlogix reports.

 

In CBOT pit trades, JP Morgan bought 600 July, Fimat bought 1,500 July, and Man Financial bought 1,000 July. Fimat sold 2,000 July.

 

 

KANSAS CITY BOARD OF TRADE

  

KCBT wheat futures ended mostly higher, underpinned by technically related fund buying, said a KCBT commission house broker. The move was more technical than anything fundamental, with spillover support from rallying corn prices providing a spark, with many traders viewing bullish comments from the wheat tour as preliminary findings, he added.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended mostly lower in quiet trade. Traders said other than continued spread trade, with traders liquidating May positions, the market followed the ups and downs of Chicago and Kansas City wheat futures.