May 8, 2008

 

US Wheat Review on Wednesday: Slips as markets retreat from rally

 

 

U.S. wheat futures weakened Wednesday as assets were reallocated throughout the family of agricultural commodities, a CBOT floor trader said. Chicago Board of Trade July wheat dropped 10 1/2 cents to US$8.07 1/2 cents per bushel. Kansas City Board of Trade July wheat fell 6 1/4 cents to US$8.57 3/4, and Minneapolis Grain Exchange July wheat shed 3 3/4 cents to US$9.71 1/4.

 

In the absence of any fresh fundamental news, "it's all just moving money around," the trader said, reiterating a sentiment voiced by traders throughout the day that a portion of gains in corn and soybeans came at wheat's expense.

 

Traders bought corn and sold wheat, one trader said. July corn gained 6 3/4 cents to US$6.13 and July soybeans added 32 cents to US$13.09.

 

Wheat pulled back after ending firmer Tuesday.

 

"A lot of people were assuming the market was primed for recovery," said Gavin Maguire, Iowa Grain's director of research. "But we don't like the look of it. The whole planet's growing wheat ... We see further room to the downside."

 

Though he declined to discuss the details of his firm's sales position, he noted sales were mostly commercially driven Wednesday, but included some speculative trades.

 

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

 

 

Kansas City Board of Trade

 

Reports from the 2008 Hard Red Winter Wheat Tour added to the bearish tonnee, a trader said.

 

Wheat in parts of western Kansas is in mostly good condition, though weather will be key for future growth, scouts on one leg of the tour said Wednesday. Arland Stephens, a farmer from Norwich, Kan., said his group had seen wheat in good condition, though moisture will be critical. "If we stay damp we will see disease pressure and hot, dry weather will stress the small wheat," he said. Crop scouts have so far seen very little if any disease concerns.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures pulled back, after the July contract gained 30 cents to close at US$9.75 Tuesday.

 

"We had a big run up yesterday; it's not unusual to take it down after that," a MGE floor trader said, noting the total give-back was modest.

 

Traders continue to watch the weather's affects on spring planting as well.

 

For spring wheat planting, DTN Meteorologix saw improving soil conditions for wheat through the northern Plains. Cold weather may force some replanting, the firm said.