December 28, 2007

 

US Wheat Review on Thursday: Falls on profit-taking, lack of bullish news

 

 

U.S. wheat futures tumbled Thursday on profit-taking as the market pulled back from recent gains on an absence of bullish news and spillover support.

 

Chicago Board of Trade March wheat ended 26 1/4 cents lower at US$9.15 a bushel. Kansas City Board of Trade March wheat closed down 23 1/2 cents at US$9.44, and Minneapolis Grain Exchange March wheat closed down 19 1/4 cents at US$10.53 3/4.

 

Traders were taking money off the table ahead of the end of the year and after recent rallies to record highs, an analyst said. There was little fresh news out to inspire bullish behavior, he said.

 

Wheat futures rose Wednesday at all three exchanges on borrowed strength from a rally in the CBOT soy complex. Soybeans, soyoil and soymeal were weaker Thursday and didn't offer any spillover support.

 

Forecasts for precipitation in hard red winter wheat areas of the U.S. Plains were seen as another bearish factor, even though the crop is dormant, an analyst said. Dry conditions earlier this year were seen as unfavorable for the crop.

 

Following the setback in prices, Egypt's state-owned General Authority for Supply Commodities said it is tendering to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment Jan. 10 to Feb. 10, on a free-on-board basis. There is still sentiment that U.S. wheat prices are too high to be competitive on the global market, a CBOT floor trader said.

 

The results of the tender, expected out Friday morning, should help give the markets direction, the trader said.

 

 

Kansas City Board Of Trade

 

KCBT March wheat briefly touched limit down, 30 cents lower, on profit-taking and a pullback from Wednesday's gains, a floor trader said. There was no fresh news on which the market could rally and soybeans didn't offer any more spillover strength, he said.

 

Low pressure in the southern Rockies was expected to bring a winter storm system to the Southern Plains and Midwest during the Friday and Saturday timeframe, according to DTN Meteorlogix. The private weather firm said "significant snow" is especially possible in winter wheat areas of central and western Kansas, eastern Colorado and southwestern Nebraska.

 

A less-stormy period begins after this winter storm system moves out of the Plains and Midwest, and continues to the end of the 10-day period, Meteorlogix said. Snowfall with this system will benefit winter wheat soil moisture, the firm said.

 

The crop isn't actively growing so forecasts for precipitation were "more of a talking point than anything," said Dave Marshall, an independent marketing adviser and commodities broker. Still, "it can't hurt," he said.

 

 

Minneapolis Grain Exchange

 

Trading was thin and quiet at the MGE as the market followed CBOT wheat lower, a MGE floor trader said. The lack of fresh inputs or upside leadership from soybeans gave wheat an excuse to break, he said.

 

The U.S. Department of Agriculture is slated to release its weekly export sales report Friday morning. Analysts expect sales to be 200,000 to 550,000 metric tonnes.