US Wheat Review on Monday: Falls on harvest progress, weak demand

 

 

The advancing U.S. winter wheat harvest and continued bearishness about weak export demand weighed on U.S. wheat futures Monday, as traders evened up positions ahead of key crop reports.

 

Chicago Board of Trade September wheat fell 5 1/4 cents to US$5.57 3/4 a bushel. Kansas City Board of Trade September wheat dropped 8 cents to US$5.92, and Minneapolis Grain Exchange September wheat lost 10 3/4 cents to US$6.56 1/2.

 

Wheat doesn't have a fundamental storyline to support gains, a CBOT floor trader said. The harvest is bringing new supplies, and U.S. prices aren't competitive on the world export market, he said.

 

The U.S. faces competition for export business from other countries which have plenty of wheat. Weekly U.S. wheat-export inspections of 10.126 million bushels were below trade expectations of 14 million to 19 million.

 

Traders are waiting for the U.S. Department of Agriculture to issue U.S. acreage and quarterly stock reports at 8:30 a.m. EDT (1230 GMT) Tuesday. Tuesday also is first notice day for July futures contracts, the end of the month and end of the quarter. Traders and analysts estimated deliveries against the CBOT July wheat contract would be heavy at 4,000 to 5,000 contracts.

 

 

Kansas City Board Of Trade

 

Warm, dry weather is expected to favor U.S. winter wheat cutting in the Plains this week, traders said. The conditions should be "pretty much perfect" for harvest, a KCBT trader said.

 

There was a "very steady stream of hedging," a floor trader said. "It's not heavy; it's just steady."

 

Cutting in Kansas should be 30% to 35% complete in the USDA's weekly crop-progress report, due out at 4 p.m. EDT (2000 GMT) Monday, a KCBT trader said. Harvest was 5% complete a week ago.

 

There was "a lot of positioning ahead of all the [Tuesday] events," including the USDA crop reports and first notice day, a trader said.

 

 

Minneapolis Grain Exchange

 

Wheat stumbled on its bearish fundamentals and weak technical picture, a market analyst said. The markets have fallen hard since the start of the month, with MGE September wheat dropping US$1.45 3/4 from its June 1 session high.

 

Traders will be looking at how the USDA adjusted its estimate for U.S. spring wheat acres following planting delays. There are expectations for a "relatively small net loss" in spring wheat acres, as some acres went unplanted and some land intended for other crops, such as canola, may have been switched to wheat, the analyst said.

 

MGE July wheat led the downside and closed down 15 1/2 cents at US$6.51 3/4. Shorts have been "a little quicker to pull the trigger than the longs" in getting out of the market, and there was some correcting of inter-market spreads, he said.