May 2, 2008

 

US Wheat Review on Thursday: Finishes down, but off session lows

 

 

U.S. wheat futures ended in negative territory Thursday as record world harvest predictions continued to weigh on prices, analysts and traders said.

 

Chicago Board of Trade July wheat slipped 11 cents to US$7.90 per bushel. Kansas City Board of Trade July wheat dropped 2 1/2 cents to US$8.39 1/2, and Minneapolis Grain Exchange wheat dropped 2 1/4 cents to US$9.36.

 

The approaching harvest in the Northern Hemisphere is seen as bearish as growers expanded seedings due to high prices last fall.

 

"It's a matter of a continual slide into harvest, unless you get some problems in corn and beans, which is possible," said Spectrum Commodities analyst Louise Gartner.

 

Citigroup analyst Terry Reilly concurred.

 

"I think we'll remain under US$8 for the next three to six months because of the world crop supplies coming on line," he said.

 

A short-term move to the upside may follow the release of Statistics Canada's March 31 wheat stocks report Wednesday, Reilly said. Reilly expects the stocks to fall to 10 million tonnes from 15.977 million a year earlier.

 

The only other upside driver could be end users switching livestock feed rations to wheat from corn, but, he said, "any rallies will be short-lived."

 

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

 

Kansas City Board of Trade

 

Confirmation of the crop's abundance won't occur until conditions of spring wheat crop are evident, but improving crop conditions across hard red winter wheat territory are further pressuring prices, Reilly said. Winter wheat was planted in the fall, while spring wheat is currently being planting.

 

Cold weather forecast for Friday night in the Plains does not pose a very serious threat because conditions shouldn't support a hard freeze, and most wheat hasn't advanced beyond jointing, said Cropcast Agricultural Weather.

 

Any damage would be "on a very small scale," Cropcast said.

 

Minneapolis Grain Exchange

 

MGE wheat futures closed lower with the other wheat markets.

 

Delays in spring wheat planting may encourage some producers to switch into soybeans, said Randy Englund, executive director of the South Dakota Wheat Commission. A CBOT floor trader said any evidence of crop switching should support the MGE wheat futures.

 

As of April 28, South Dakota was 49% planted, compared to its 5-year-average of 78%, according to the U.S. Department of Agriculture.