May 3, 2007

 

US Wheat Review on Wednesday: Lower, profit-taking, easing crop concerns

 

 

U.S. wheat futures ended lower Wednesday, backpedaling on continued profit-taking pressure from an April rally as the market gradually trims risk premium amid easing crop concerns.

 

July CBOT wheat ended 7 1/2 cents lower at US$4.93 1/2, July KCBT wheat settled 2 1/4 cents lower at US$4.84 3/4, and July MGEX wheat finished 7 1/2 cents lower at US$5.20 3/4.

 

The market is still seeing profit-taking from the April rally, with technical weakness, favorable reports from the hard red winter wheat tour and the easing of concerns for world crops attracting speculative selling, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

Winter wheat crop tour results, reports of healthy crops in western Kansas and talk of drier conditions in the Dakotas - opening up opportunities for spring wheat plantings - set the tonnee for the market, analysts added. Talk of wheat/corn spread unwinding added pressure to keep futures on the defensive as well, traders said.

 

The reports from the crop tour showed some areas did not get hurt as much as expected, and with significant crop damage already priced in the market, there is room to gradually trim risk premium, McCambridge said.

 

Reports of rain moving across Europe, particularly in dry areas of France, eased some world production worries to aid the defensive tonnee as well, traders said. In addition, the market did not have any fresh supportive news to feed market bulls, with technical weakness surfacing after an impressive April rally to new contract highs, a CBOT floor analyst said.

 

DTN Meteorlogix Weather Forecasts said some beneficial rain fell Tuesday in southern Europe - notably in the Po River Valley of Italy, which had been very dry during the past few months. Additional rains from Spain and Portugal through the Balkan states will occur during the rest of this week.

 

In northern Europe, however, the weather pattern remains dry and stressful from northern France through Germany. Eastern Europe through Ukraine had hard freeze conditions Tuesday. Temperatures dipped into the low 20s Fahrenheit. Additional cold weather is in store over Ukraine on Wednesday and Thursday. The cold wave has already damaged some rapeseed crops and may have hurt advanced winter wheat as well, Meteorlogix reports.

 

In CBOT pit trades, buyers and sellers were lightly scattered among various commission houses. Fimat bought 400 July, Man Financial sold 800 July, with Fimat, Fortis and UBS Securities each sellers of 200 July. Speculative fund selling was estimated at 2,500 contracts.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures ended lower, but finished at session highs on late commission house buying. The market was under pressure, though, from favorable yield reports from the Wheat Quality Council hard red winter wheat tour, a floor broker said.

 

Otherwise, activity was very quiet, until the last three to four minutes of the session when Fimat surfaced as a buyer of 600 to 700 July wheat to trim advances, he said.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGEX wheat futures ended lower, experiencing a very quiet, light volume session.

 

Traders said the session was uneventful, with spreads lifeless and traders watching price movement in Chicago for direction, an MGEX broker said.

 

Meanwhile, mild pressure was exerted from improved planting forecasts for the spring wheat belt.