May 17, 2007

 

US Wheat Review on Wedneaday: Slumps on harvest, eased weather fears

 

 

The impending domestic harvest and improving weather conditions in global growing areas dragged U.S. wheat features to a lower close Wednesday, analysts said.

 

Chicago Board of Trade July wheat slid 5 1/4 cents to US$4.96 3/4 per Bushel. Kansas City Board of Trade July wheat ended down 4 1/4 cents at US$4.85 1/4, and Minneapolis Grain Exchange July wheat closed down 2 3/4 cents at US$5.21.

 

Wheat had closed higher for the previous three day sessions. However, it is difficult to sustain a rally with harvest approaching quickly, said Louise Gartner, analyst with Spectrum Commodities.

 

There is a seasonal tendency for prices to slip as the new supply nears the point of coming online, analysts noted. Fears about dryness in key growing areas also have eased somewhat, Gartner said.

 

The eastern Australia wheat-producing provinces of Victoria and New South Wales have a "promising outlook" for rain showers to finish out the week, according to DTN Meteorlogix. That will provide good soil moisture in the early stages of the growing season, the weather firm said.

 

In China, the North China Plain was mostly dry Tuesday, with above-normal temperatures and highs at 95 degrees Fahrenheit, Meteorlogix said. During the next five days, generally dry and hot weather is in store, notably in the high-production province of Henan, according to the firm. Henan has no significant rain ahead in the next seven days.

 

Still, "excitement over China dryness is easing," Gartner said. "It's still early" in the season.

 

Looking ahead, wheat will have a difficult time holding rallies in the near term if CBOT corn stalls, Gartner said. More information will surface about the crop's condition once the combines get rolling, and new evidence of damage from an early April freeze would be supportive, she added.

 

Bullish enthusiasm in wheat was likely tempered by Wednesday's declines as they followed Tuesday's bullish "outside day" up on the daily bar chart, Gartner noted.

 

"Since we couldn't get any follow-through to the upside from yesterday's pretty impressive outside day up, that pretty much takes the steam out of the bulls' enthusiasm," she said.

 

 

Kansas City Board of Trade  

 

Growing conditions look "generally favorable" in the U.S. Southern Plains as hard red winter wheat states move closer to harvest, Meteorlogix said. Mostly dry weather will cover the HRW wheat areas through the first part of next week, according to the firm's forecast.

 

"This trend will be beneficial for wheat, and will inhibit further development of such diseases as mold and rust on the wheat plants," Meteorlogix said. "South Texas wheat is going through a favorable drying trend ahead of harvest, which is on pace to begin during the last half of the month."

 

Trading was choppy during the day session with little fresh news out to move the market, a KCBT floor trader said. Gains in CBOT corn and soybeans help boost prices around midday but the market could not hold the advances, he added.

  

 

Minneapolis Grain Exchange

  

MGE was seen as a follower of activity at the CBOT, a floor trader said. There was not much supportive news out to justify a third session of gains, he added.

 

News that Iraq issued a new tender to buy 100,000 metric tonnes of wheat after U.S. and Canadian suppliers rejected a low-price counter offer sent to them by the Grain Board of Iraq was "no big deal," the trader said. No one's going to get too excited if Iraq isn't willing to pay for the wheat, he said.

 

In other news, a trade team representing the majority of Algeria's private durum-purchasing community is in the U.S. this week, although it isn't certain whether any deals will be made, industry members said.

 

The team of importers and millers is slated to visit major durum-producing states, including North Dakota and Minnesota, with stops at a grain elevator, farms, the Port of Duluth and the MGE, among other places.