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October 29, 2008

 

US Wheat Review on Tuesday: Falls; erases early gains on soybean weakness

 

 

U.S. wheat futures fell Tuesday on speculative fund selling linked to a lower close in soybeans and a two-sided trade in corn, reversing a strong open, traders and analysts said.

 

Basis December contracts, Chicago Board of Trade wheat fell 15 1/2 cents to US$5.14 a bushel, Kansas City Board of Trade wheat lost 11 1/4 cents to end at US$5.53 1/4 and wheat at the Minneapolis Grain Exchange fell 7 3/4 cents to settle at US$6.16 3/4 a bushel.

 

The wheat market relinquished a higher open once traders began selling into the early rally amid skepticism over U.S. Agriculture Department's surprise revisions to the Oct. 10 corn and soybean production and supply/demand data. The government made no revisions to wheat, however, leaving the market open as a follower to the gyrations in corn and beans.

 

"Wheat's not going to be able to move higher on its own, so it's going to depend on strong support from the outside markets or the development of more demand," said Shawn McCambridge, senior grains analyst at Prudential-Bache.

 

"Without either of those developing after the sharply higher open, early buyers saw there wasn't any upside potential and they turned and got out," he said.

 

Ultimately, the data proved to be friendlier for corn prices, though wheat didn't benefit from any spillover strength.

 

With the winter wheat crop off to such a good start from both a moisture and temperature standpoint, traders are expected to have a difficult time rallying.

 

Top wheat producer Kansas has a 72% good-to-excellent rating, the USDA said, down from 80% last week but still a strong number at this early stage, analysts said. Eighty-three percent of the wheat crop there has been planted, with 73% emerged. That compares with 89% planted at this time last year and 68% emerged.

 

The Oklahoma wheat crop was 68% good to excellent, while the Texas crop, where conditions are drier, rated 52% good to excellent, the USDA said. Colorado wheat is 77% good to excellent, while Ohio is pegged at 65 percent.

 

Ample soil moisture and a rise in temperatures over the next week or so are expected to favor early growth and development, while allowing producers to finish planting the last of the crop, DTN Meteorlogix said.

 

Funds sold an estimated 3,000 CBOT wheat contracts.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT December wheat rose to an early US$5.81 high, its strongest price in a week, before fund selling pressure caught up with the market. The contract filled an upside gap left from the Oct. 22 lower opening, before falling to its lows of the session.

 

The total U.S. winter wheat crop rated 65% rated good to excellent, up from 55% last year, the USDA reported.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE December wheat also leapt to a one-week high of US$6.38 on the early buying strength, supported by corn and soybeans' sharply higher opening. But traders eventually tugged prices lower as the buying interest faded.

 

The losses at the MGE, however, were not as severe as those at the CBOT and KCBT.

 

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