May 23, 2007

 

US Wheat Review on Tuesday: Slips on approaching harvest, corn losses

 

 

U.S. wheat futures finished lower Tuesday as the approaching harvest and losses in the neighboring corn market pressed on prices, traders said.

 

Chicago Board of Trade July wheat slid 8 1/2 cents to US$4.71 per bushel. Kansas City Board of Trade July wheat ended down 9 3/4 cents US$4.64 3/4, and Minneapolis Grain Exchange July wheat finished 7 3/4 cents lower at US$4.97 1/2.

 

Harvest has already begun in some southern states, and wheat has a tendency to falter as the trade prepares for new supplies to come online, a CBOT floor trader said. There also are ideas that yields from some areas, such as Texas, will be larger than previously expected, he noted.

 

Wheat producers have begun harvesting their crops in Louisiana, with "average yields" reported so far, according to a National Agricultural Statistics Service report. In Catahoula Parish, in eastern Louisiana, a grower reported harvesting 71.4 bushels per acre with 12% moisture, added Chad Henderson, analyst for Prime Agricultural Consultants.

 

In 2006, Louisiana producers planted 115,000 acres of winter wheat and saw an average yield of 53 bushels per acre, according to the USDA. This year, producers planted an estimated 220,000 acres.

 

Improving winter wheat condition ratings also reminded the trade about the potential for stronger-than-expected yields, one analyst said. The USDA on Monday afternoon rated 59% of the crop in good-to-excellent condition as of May 20, up from 58% a week ago and well above the five-year average of 30%.

 

"The crop's much better than they thought," the analyst said, referring to market participants.

 

Spillover weakness from CBOT corn was another negative for wheat, floor traders said. It will be hard for wheat to climb higher without a rally in corn or soybeans to provide upside leadership, they said.

 

It was "not helpful" to prices that Egypt's state-owned Food Industries Holding Company canceled a tender for 30,000-55,000 metric tonnes of wheat, an analyst said. The tender was canceled due to unsuitable prices, according to a Cairo-based trader.

 

FIHC was looking to buy U.S. soft red wheat, or Australian, French, Russian, Kazakh, Ukrainian or Syrian wheat for shipment June 10-20, June 20-30 or July 1-10.

 

Precipitation in major Chinese wheat-growing areas also weighed on prices, an analyst added. In Central China, the North China Plain had thunderstorms in the west Tuesday with up to one inch of rain, DTN Meteorlogix said. The rainfall pattern will cover Hebei and Shandong provinces, and spread into the dry pocket of Henan province, according to the weather firm.

 

"This is a good rainfall system for the North China Plain," Meteorlogix said.

 

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

  

 

Kansas City Board of Trade  

 

Improving winter wheat crop condition ratings were negative for prices, a KCBT floor trader said. In Kansas, the nation's top wheat-producing state, 40% of the crop was in good-to-excellent condition, compared to 38% a week ago, according to the USDA.

 

Precipitation forecast for parts of eastern Colorado and western Kansas are bringing more beneficial moisture to the already favorable wheat crop, traders added. The market also felt pressure from declines in CBOT corn, a trader noted.  

 

 

Minneapolis Grain Exchange

  

Strong spring wheat condition ratings and solid planting progress were seen as negative for MGE futures, a MGE floor trader said. The USDA rated 81% of the crop in good-to-excellent condition, compared to 79% the pervious and 76% last year.

 

Ninety-five percent of the spring wheat crop had been planted, compared to 89% last year and the five-year average of 86%, according to the UDSA.

 

Trading activity was largely subdued during the day session, the trader added. Inter-market spreaders were mostly quiet, he noted.