US Wheat Review on Thursday: Tumbles on profit-taking, corn setback

 

 

U.S. wheat futures tumbled Thursday on profit-taking and spillover pressure from losses in Chicago Board of Trade corn.

 

CBOT July wheat dropped 23 cents to US$8.81 per bushel. Kansas City Board of Trade July wheat fell 15 1/4 cents to US$9.30, and Minneapolis Grain Exchange July wheat was 5 cents lower at US$10.90.

 

Corn, which has provided leadership to wheat lately, tanked as traders booked profits amid weakness in outside markets like crude oil. Corn and wheat are linked, as both are used for animal feed.

 

Wheat recently has climbed on corn's strength, despite the advancing U.S. harvest and bearish expectations for a strong global crop.

 

"I think the key is still corn," said Sid Love, analyst for Kropf & Love Consulting. "If you turn negative to corn, you have to turn negative to the others."

 

In other news, Egypt's state-owned General Authority for Supply Commodities Thursday canceled a tender to buy at least 55,000 to 60,000 metric tonnes of wheat for late July shipment. GASC nixed the tender because prices were too high, an official said.

 

Psychologically, the cancellation had a bearish impact on wheat markets because "the buyers are saying wait a minute, guys," Love said. Even though it was cancelled, a breakdown of bids for the tender showed the U.S. is at a competitive disadvantage to Black Sea wheat and Canadian wheat, he said.

 

Nevertheless, weekly U.S. wheat export sales of 538,100 tonnes were considered solid. Analysts had only expected sales of 200,000 to 350,000 tonnes.

 

 

Kansas City Board of Trade

 

KCBT wheat futures felt pressure from weak corn and a sell-off in crude oil, a floor trader said. There are still some concerns about wet weather in hard red winter wheat areas at harvest time, but forecasts for a drying trend were seen as somewhat bearish, an analyst said.

 

Starting this weekend and early next week, very warm, dry conditions are expected to Texas after rains, Lehman Brothers said in an agricultural weather update. Recent moisture in the southern Plains rattled producers in the region who remember crop losses due to heavy rains across Kansas and Oklahoma at harvest time last year.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures followed corn into negative territory. Floor trading was slow and relatively thin, a MGE floor trader said.

 

There was selling of MGE December wheat at the close, the trader said. Locals were covering short, or sold, positions during the session, he said.