July 10, 2007

 

US Wheat Review on Monday: Lower in pullback without supportive news

 

 

U.S. wheat futures tumbled Monday in a setback from high prices and on a lack of supportive news, analysts said.

 

Chicago Board of Trade September wheat fell 10 1/2 cents to US$5.99 1/2 a bushel, and CBOT December wheat ended down 9 1/2 cents at US$6.13.

 

Kansas City Board of Trade September wheat closed 11 3/4 cents lower at US$5.90 3/4 a bushel, and KCBT December wheat settled 11 1/2 cents lower at US$6.05 1/2. Minneapolis Grain Exchange September wheat slipped 9 1/4 cents to US$6.10, and MGE December wheat finished down 8 cents at US$6.20.

 

Wheat prices rose Friday on position-squaring before the weekend but gave back those gains Monday, traders said. The trade couldn't find a reason to push prices higher again without fresh news about world production problems, a senior analyst said.

 

"It's very tough to maintain the US$6 wheat prices," he said.

 

The U.S. Department of Agriculture said weekly U.S. wheat exports for the week ended July 5 totaled 10.846 million bushels, below estimates of 17 million to 23 million. The news was negative for prices but didn't have a major impact on the trade, a CBOT floor broker said.

 

Global 2007-08 wheat stocks are pegged at a 30-year low, but that supportive factor has already been worked into the markets, the senior analyst said.

 

"This talk of the lowest world ending stock since the Jurassic period - you can only talk that up so far," he said. "It was in the market for the last several weeks."

 

News that Iraq was about to finalize deals to buy some 400,000 tonnes of wheat flour from Turkish companies also showed wheat supplies can pop up in unexpected places, an analyst said. Iraq's state-run General Co. for Grain Processing had concluded talks with the companies and was about to sign deals with them, traders in Baghdad said.

 

"We're not the only ones with wheat," the analyst said, referring to the U.S.

 

The trade is looking ahead to Thursday's release of the USDA July supply and demand report. The report, due out at 8:30 a.m. EDT (1230 GMT), will include updated estimates on wheat production and carryout.

 

 

Kansas City Board of Trade

 

Losses in KCBT wheat triggered a few small sell stops that drove prices into negative territory, a floor broker said. In general, however, KCBT futures "just kind of leaked," the broker said. "There was nothing really to support it. There was not much news."

 

The USDA's weekly crop progress report, due out at 4 p.m. EDT (2000 GMT) is expected to show winter wheat harvest at about 54% done or so, an analyst said. The USDA said harvest was 40% complete as of July 1.

 

There are concerns that wet conditions may persist in some portions of the hard red winter wheat belt, especially due to storms Monday night, T-Storm Weather said in an update to its daily forecast. Chances for storms diminish Tuesday and on Wednesday night, but there is a good chance of moisture Thursday night, the weather firm said. Temperatures should turn cooler than average for most areas as the week progresses.

 

 

Minneapolis Grain Exchange

 

Trading volume and activity were "very low and slow" at the MGE, a floor trader said. MGE wheat futures followed the other markets to the downside and felt pressure from sentiment that prices are too high, she said.

 

Good-to-excellent condition ratings for U.S. spring wheat are expected to be unchanged to 3 points lower in the USDA's weekly crop progress report, analysts say. The USDA rated 79% of the spring wheat crop in good-to-excellent condition as of July 1. Less-than-favorable weather last week would account for a decline, AgResource Company said in a market comment Monday.