June 13, 2008

 

US Wheat Review on Thursday: Slides on profit-taking after rally

 

 

U.S. wheat futures tumbled Thursday in a profit-taking setback from a limit-up rally Wednesday.

 

Chicago Board of Trade July wheat closed down 18 cents at US$8.51 per bushel. Kansas City Board of Trade July wheat fell 14 1/4 cents to US$8.92 1/4, and Minneapolis Grain Exchange July wheat shed 20 cents to US$10.26.

 

Wheat pulled back after climbing the exchange-imposed limit of 60 cents Wednesday on spillover support from a surge to record highs in CBOT corn. Corn set fresh highs again Thursday but settled with only modest gains.

 

Wheat was "bound to lose a little bit of ground" after Wednesday's rally, said Larry Glenn, owner of Glenn Commodities. "If this corn ever stabilizes or works its way down, then this wheat could go a lot faster to the downside."

 

Corn has been rallying on concerns that wet weather in the U.S. Midwest will lower production. Wheat and corn are linked, as both are used for animal feed, but corn didn't provide strong enough leadership to the upside Thursday to firm up wheat, a trader said.

 

Unlike corn and soybeans, the fundamental outlook for wheat is bearish amid projections for a big global crop. A setback in crude oil and strength in the U.S. dollar index added pressure to wheat, traders said.

 

The wheat markets will look toward corn for direction Friday and wait for the results of an Egyptian tender, a trader said. Egypt's state-owned General Authority for Supply Commodities said after the close it was tendering to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment July 11-31, on a cost and freight basis.

 

 

Kansas City Board of Trade

 

KCBT wheat stumbled as traders booked profits. Weak outside markets and the firm dollar added pressure, KCBT traders said.

 

Weekly U.S. wheat export sales of 335,100 tonnes for delivery in 2008-09 were slightly above trade expectations of 100,000 to 250,000. The export sales were "much improved" from the previous week, the U.S. Department of Agriculture said, but mostly ignored by the market.

 

"It's kind of a small number which we usually have this time of year," Glenn said. The wheat marketing year began June 1.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures were a follower of CBOT and KCBT wheat, traders said.

 

The daily trading limit for MGE wheat will remain expanded to 90 cents Friday after Wednesday's limit-up close. The limit for CBOT and KCBT wheat will revert to the default level of 60 cents.