US Wheat Review on Monday: Slides on profit-taking, limit-down corn

 

 

U.S. wheat futures sank Monday on profit-taking and spillover pressure from a limit-down drop in Chicago Board of Trade corn, analysts said.

 

Chicago Board of Trade September wheat fell 53 1/4 at US$8.58 3/4 per bushel. Kansas City Board of Trade September wheat tumbled 48 3/4 cents to US$8.96 1/4, and Minneapolis Grain Exchange September wheat slid 51 3/4 cents to US$9.50 1/2.

 

Wheat pulled back after rising recently on short-covering. Last week, CBOT September wheat ended up 27 3/4 cents on the week, despite the advancing U.S. harvest and expectations for a strong global crop.

 

"There was really never anything bullish in the wheat market to being with," said Tim Hannagan, analyst for Alaron.

 

Funds were thought to be taking some money off the table, Hannagan said, and there was spillover pressure from corn's weakness. CBOT December corn fell the daily, exchange-imposed limit of 30 cents.

 

"It is the month-end. It is the quarter-end," Hannagan said. "Funds like to take profits. Of course, corn was down, as well."

 

It also was seen as bearish that the U.S. Department of Agriculture pegged wheat stocks as of June 1 at 306 million bushels, above the average of trade estimates. But the grain markets could rebound Tuesday, as it is a new month and quarter and the USDA data will probably be priced in, Hannagan said.

 

The results of an Egyptian tender should help give wheat direction. Egypt's state-owned General Authority for Supply Commodities said it would tender Tuesday to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment July 23-31 or Aug. 1-10 on a free-on-board basis.

 

U.S. wheat has had a competitive disadvantage in the global market, particularly compared to prices from the Black Sea region. GASC last week said it bought 60,000 tonnes of Russian wheat and 90,000 tonnes of optional origin wheat in a tender.

 

 

Kansas City Board of Trade

 

KCBT wheat futures felt pressure from the weakness in CBOT corn and from the higher-than-expected estimate for stocks as of June 1. Seasonal harvest pressure also weighed on the market, a trader said.

 

The USDA will update its estimate on harvest progress at 4 p.m. EDT in the weekly crop progress report. It should show cutting has had a "steady advance," although progress is expected to remain behind normal after wet weather delays, an analyst said.

 

Hot weather in southwest Kansas will "offer a major assist to harvest conditions in wheat fields, and will mean drier ground for moving harvest equipment in the central and Southern Plains, DTN Meteorlogix said in a forecast. Temperatures could approach 100 degrees Fahrenheit, the private weather firm said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures closed lower, following CBOT wheat and corn, a floor trader said. The USDA's estimate for spring wheat acreage was not seen as too surprising, he said.

 

The agency projected spring wheat acreage at 14.197 million acres, down from its March estimate of 14.333 million. Many analysts had been expecting a modest drop, as some farmers switched their land to soybeans and other crops from spring wheat.