US Wheat Review on Monday: Stumbles; spillover selling, World crop outlook

 

 

Spillover selling and expectations for a record global wheat crop pushed U.S. wheat futures lower Monday, with nearby Chicago Board of Trade September wheat closing under US$8 per bushel for the first time in seven weeks.

 

CBOT September wheat fell 13 cents to US$7.91, its lowest close since June 4. Kansas City Board of Trade September wheat dropped 14 3/4 cents to US$8.23, its lowest close since June 4. Minneapolis Grain Exchange September wheat sank 13 cents to US$8.75, its lowest close since July 15.

 

Weakness in CBOT corn and soybeans was an anchor for wheat futures, said Jason Britt, broker and analyst for Central State Commodities. Corn continued to pull back from last month's rally to record highs amid ideas that the outlook for the U.S. crop is improving.

 

Wheat has been following corn lately, as both are used for animal feed. There was a lack of bullish news to support the grains, traders said.

 

Expectations for a record world wheat crop continue to hang over the market due to expanded plantings and favorable global weather, an analyst said. Global wheat production in 2008-09 is projected at a record 664 million tonnes, up 53 million tonnes from 2007-08, according to the U.S. Department of Agriculture.

 

The ongoing U.S. winter wheat harvest is expected to be 72% to 74% complete in the USDA's weekly crop progress report due at 4 p.m. EDT. Last week, harvest was 62% complete.

 

"Things are progressing," Britt said. "We have to digest the recently harvested side of it. That's a negative."

 

 

Kansas City Board Of Trade

 

KCBT wheat futures felt pressure from the sharp losses in CBOT corn and from improving weather outlooks for the Southern Hemisphere, traders said. Weekend weather in Argentina and Australia was better than expected, MF Global's KCBT office said in a market comment.

 

Showers through western and southeastern wheat areas of Australia during the weekend will help recharge soil moisture, DTN Meteorlogix said. The moisture should help "stabilize" that crop, which has suffered from drought for the past two years, an analyst said.

 

Argentina, meanwhile, could see rain through northern and eastern wheat areas during the next day or two, Meteorlogix said.

 

Harvest activity also continued to loom over the market, a floor trader said. Nebraska's hard red winter wheat harvest "has begun wrapping up in a large part of the state," according to a report from the Nebraska Wheat Board.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures pulled back with the other grain markets after rising Friday.

 

Still, industry members have some concerns about spring wheat losses due to hot and dry weather, an analyst said.

 

Good-to-excellent condition ratings for spring wheat are expected to remain unchanged or drop by as much as 2 percentage points in the USDA's weekly crop progress report, traders said. A week ago, 61% of the crop was rated good-to-excellent.