May 4, 2007

 

US Wheat Review on Thursday: Ends mixed; pulls back as buying dries up

 

 

U.S. Wheat futures ended mixed Thursday, with prices pulling back from earlier highs on late speculative selling pressure with a lack of fund buying allowing futures to drift heading down the stretch, analysts said.

 

July CBOT wheat ended 1 cent higher at US$4.94 1/2 while July KCBT wheat settled 1 3/4-cents lower at US$4.83, and July MGE wheat finished 2 1/2 cents lower at US$5.18 1/4. Spillover support from higher corn futures provided price strength for most of the day, as traders continue to look for fresh inputs to direct prices, analysts said.

 

Fundamental pressure was exerted from reports of favorable winter wheat yields in western Kansas that are seen offsetting yield losses from freeze damage in central and eastern Kansas, said Brian Hoops, president Midwest Market Solutions in Yanktonne, South Dakota.

 

Otherwise, the market lacked fresh supportive influences, with lackluster weekly export sales adding pressure, traders said. Nevertheless, with uncertainty surrounding world and domestic crops, futures managed to hold up well, with late position squaring providing late selling pressure.

 

The Kansas hard red winter wheat tour sponsored by the Wheat Quality Council wrapped up its tour Thursday afternoon. The 2007 Kansas hard red winter wheat crop is expected to have an average yield of 41.0 bushels per acre, according to figures released Thursday. The average of tour participants' production estimates puts the Kansas HRW crop at 392.7 million bushels. The tour's estimate is up from last year, when the state produced 291.2 million bushels according to the U.S. Department of Agriculture. The USDA said the average yield last year was 32 bushels/acre.

 

Meanwhile, the DTN Meteorlogix Weather Forecasts said episodes of showers and thunderstorms will remain over the Southern Plains winter wheat areas during the next week. This weather spell may bring on some disease occurrences in winter wheat, but the moisture is aiding somewhat in the recovery efforts of the crop following the hard freeze during early April. Except for some beneficial rains in southern France and northern Italy, dry weather is a major issue going into late spring in prime grain areas of Europe. The most notable concerns for dryness are in Germany and Poland and east to Ukraine and western Russia. Australia remains dry with no follow-up rainfall after some good rains in the wheat areas last week, Meteorlogix reports.

 

In CBOT pit trades, Man Financial bought 1,500 July, Fimat and Rosenthal each bought 500 July. Sellers were scattered among various commission houses. Speculative fund buying was estimated at 3,000 contracts.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures ended mostly lower in relatively benign trading activity, KCBT traders said. It was a rather light volume day, with traders waiting on fresh inputs to generate solid price direction, analysts said. The market chopped around, with traders bantering numbers around about the eventual yield and crop size of the Kansas hard red wheat crop, traders added. Volume was estimated at 3,700 on the electronic side, with pit volume estimated at 8,600 contracts.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat futures ended mixed in a choppy atmosphere, with the market following the lead of other wheat futures for most of the day. Spillover support from higher corn futures generated strength during the day, but without fresh inputs and virtually non-existent spring wheat export sales, the trade was content to sit back and watch other markets and the weather, a MGE trader said. Meanwhile, the market is at a critical technical point as price weakness on Friday could uncover a slew of sell stop orders resting beneath prices, he added.