June 20, 2006

 

US Wheat Review on Monday: Mixed; spillover pressure, harvest delay

 

 

U.S. wheat futures ended mixed Monday, following a choppy session, as the market battled the forces of spillover weakness from neighboring grain futures and support from winter wheat harvest delays.

 

Chicago Board of Trade July wheat futures ended 1/2 cent lower at US$3.58 1/2, July Kansas City wheat settled 1 1/2 cent lower at US$4.61 and Minneapolis July wheat ended 1/4 cent per bushel higher at US$4.33 1/2.

 

The market ended with a mixed tonnee, managing to quickly absorb early selling pressure after neighboring markets consolidated off their session lows, concerns over winter wheat harvest delays and the potential for quality losses due to recent rains in the hard red winter belt, provided underlying support to prices, said Shawn McCambridge, senior gains analyst with Prudential Financial in Chicago.

 

The market was influenced by weakness in CBOT corn and soybeans initially, but with news of Egypt buying 230,000 metric tonnes of U.S. and Canadian wheat, that included 120,000 tonnes of U.S. soft white wheat, and 55,000 tonnes of U.S. soft red wheat, futures did encounter fundamental support, analysts add.

 

A general decline in global commodity markets aided the declines, but recent rains raising concerns of hard red winter wheat quality losses generated support to offset seasonal harvest pressure.

 

Wet weather over the past three days delayed wheat harvests in many areas of Kansas. The abundance of rain this week in the state delayed harvest and hurt test weights, said Tanner Ehmke, market analyst with AgResource Co. in Chicago. Test weights will suffer following the rains, he added.

 

After the close, the U.S. Department of Agriculture is scheduled to release its weekly crop progress report 4 p.m. EDT (1500 GMT). Analysts anticipate the winter wheat harvest will come in near 50% complete. In CBOT pit trades, Goldenberg Hehmeyer and RJ O'Brien each bought 1,000 September, Man Financial bought 1,500 September, Refco and Tenco each bought 300 September. Sellers were scattered among various commission houses. Commodity fund buying was estimated between 3,000 and 4,000 lots.

 

 

KANSAS CITY BOARD OF TRADE

 

Overall volume in KCBT wheat was subdued as little news was featured in the hard red winter wheat market, traders said. However, harvest delays, crop quality issues provided limited support to stem the effect of declines in other markets and seasonal harvest pressure, analysts said.

 

In pit trades, ADM Investor Services, FIMAT Futures, UBS Securities, and JP Morgan were featured players on the day.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

Futures ended mixed, with nearby contracts managing to rebound on spreading and position evening after outside markets found stability. However, good growing conditions for spring wheat crops in the northern plains into Canada provided pressure to keep a defensive tonnee in the market for most of the day.