May 23, 2008

 

US Wheat Review On Thursday: Tumbles on weak neighboring markets, harvest

 

 

Weakness in neighboring markets and anticipation of active U.S. winter wheat cutting shoved U.S. wheat futures sharply lower Thursday, traders said.

 

Chicago Board of Trade July wheat fell 33 cents to US$7.45, taking out a support level at US$7.49. Kansas City Board of Trade July wheat tumbled 29 3/4 cents to US$8.00 1/4, and Minneapolis Grain Exchange July wheat slid 12 3/4 cents to US$10.19 3/4.

 

CBOT corn and soybeans closed in negative territory, along with crude oil and metals. The other markets' losses opened the door for wheat to follow its weaker bias, traders said.

 

"With corn and soybeans falling apart, it allowed wheat to go its path of least resistance, which is down," said Arlan Suderman, analyst for Farm Futures. "Wheat simply can't sustain a rally without help."

 

Wheat's fundamental outlook is bearish as the world is expected to produce more wheat in 2008-09 than ever before due to an expansion of plantings and generally favorable global crop weather. The trade focused on the start of U.S. winter wheat harvesting in southern areas, such as Texas, and forecasts for a strong yields.

 

The next downside target for CBOT July wheat is US$7 now that the contract has fallen below support at US$7.49, which was last week's low, Suderman said. A drop to US$7 could represent an early harvest low, he said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures came under pressure from chatter about the new-crop hard red winter wheat harvest, traders said. Early yield reports from southern Texas were low, a trader said, but it's difficult to read much into the dispatches because the harvested areas are not known for being concentrated with wheat.

 

"The focus is on the approaching harvest," an analyst said.

 

KCBT July wheat dropped to a session low of US$7.99 before trimming losses a bit. The contract was testing a support level at US$7.98, its low from last week, a trader said.

 

 

 

Minneapolis Grain Exchange

 

Deferred MGE July wheat futures came under more pressure than the nearby July contract amid some lingering worries about tight old-crop spring wheat supplies, an analyst said. New-crop MGE September wheat fell 30 cents to US$8.52.

 

Spring wheat planting is just about complete in the U.S., according to Cropcast Agricultural Weather. Dryness has expanded during the past couple weeks across parts of the crop area, leading to spotty emergence, the private weather firm said.

 

Moisture is needed in the near term across areas of the Northern Plains and Canadian Prairies to assure full germination of recently planted crops and to increase crop health and stability, Cropcast said. The Dakotas, Montana and Alberta, Canada look most likely to receive the needed rains in the upcoming week, the firm said.