US Wheat Review on Tuesday: Stumbles on profit-taking, overdone ideas

 

 

U.S. wheat futures closed lower on profit-taking Tuesday amid ideas the markets were due for a correction following recent rallies.

 

Chicago Board of Trade July wheat closed down 5 cents at US$6.69 1/2 a bushel, Kansas City Board of Trade July wheat lost 7 cents to US$7.19, and Minneapolis Grain Exchange July wheat settled down 2 cents at US$7.93.

 

Market participants took some profits off the table after nearby contracts set eight-month highs Monday, traders said. The gains were seen as technically overdone, an analyst said.

 

Fundamental news took a backseat to technical and fund activity, analysts said. Commodity funds, which were buyers Monday, sold an estimated 4,000 contracts at the CBOT.

 

There was late index fund rolling of positions to July 2010 from July 2009, traders said. CBOT July 2010 wheat ended up 3 3/4 cents at US$7.56 1/2.

 

 

Kansas City Board of Trade

 

Profit-taking weighed on KCBT wheat as the market took a "breather" following recent rallies, a floor trader said. The market has "seen some pretty solid gains" lately and was due for a pullback, the trader said.

 

The index fund roll to July 2010 wheat "lifted things up quite a bit," a trader said. KCBT July 2010 wheat ended up 5 1/2 cents at US$7.80.

 

The advancing hard red winter wheat harvest would normally pressure prices at this time of year. However, it's difficult to predict what will happen with prices because "we're just in the throes of a fund buying spree," a trader said. Fund buying recently has helped support grains and soybeans.

 

 

Minneapolis Grain Exchange

 

MGE wheat saw more modest losses than the KCBT and MGE.

 

Planting of hard red spring wheat continues to lag, but there are expectations producers in the northern U.S. Plains will get as much in the ground as they can to take advantage of high prices, traders said. Cool, wet weather slowed seeding progress this year.

 

MGE September wheat, which represents the new crop, ended down 1 1/4 cents at US$7.99.

 

"The market is sure saying, 'Hey, give me some wheat here,'" a trader said. "You've got US$8 wheat."

 

Spring wheat planting was 89% complete as of Sunday, down from 100% last year and the average of 98%, according to the U.S. Department of Agriculture. The crop was 67% emerged, down from 91% last year and the average of 90%.