January 20, 2007

 

US Wheat Review on Friday: Ends lower under CBOT corn pressure

 

 

U.S. wheat futures finished lower Friday on borrowed weakness from the neighboring corn market and weak fundamental support, sources said.

 

Chicago Board of Trade March wheat closed down 4 cents at US$4.67 a bushel, Kansas City Board of Trade March wheat ended 5 3/4 cents lower at US$4.89 1/4, and Minneapolis March wheat finished down 3 1/2 cents at US$4.98.

 

Wheat opened stronger with support from stronger-than-expected weekly export sales data from the U.S. Department of Agriculture, a floor source said. Futures prices soon stumbled into negative territory, however, on spillover weakness from CBOT corn, he added.

 

Wheat has been looking to CBOT corn for direction since the USDA last week released bullish reports that lowered estimates for corn production and ending stocks, analysts said.

 

"It's hard to see wheat having any upside any time soon unless the corn market takes off again," said Doug Houghtonne, analyst with Brock Associates.

 

The USDA on Friday reported weekly U.S. wheat export sales for the week ended Jan. 11 totaled 824,700 metric tonnes, above analysts' expectations. Analysts surveyed by Dow Jones Newswires had predicted sales between 250,000 tonnes and 600,000 tonnes. The sales were 3 1/3 times the previous week and 2 3/4 times the prior four-week average, the USDA said.

 

Major buyers included Japan, which took 139,200 tonnes; unknown destinations, which bought 116,000 tonnes; and Iraq, which bought 100,000 tonnes, according to the USDA.

 

Export sales for the year remain down over the same point last year, a negative for trading, an analyst said. Overall, sales have been "lethargic," Houghtonne added.

 

Favorable growing conditions in the U.S. Plains also have been fundamentally bearish, he said.

 

In the Midwest, conditions are moderate, according to the DTN Meteorlogix weather firm. Snow will be minimal, with one to four inches possible in the west and only scattered snow showers in the east, the firm reported.

 

Temperatures will be near to above normal, the firm said.

 

In other news, Australia approved the import of Argentine wheat and other grains for use as animal feed, according to Argentina's national agricultural quality and sanitation service. Australia has been searching for new sources for grain due to a drought this year that caused a sharp decrease in production, the service said.

 

The Commodity Futures Trading Commission on Friday afternoon is scheduled to release the commitment of traders report for the period ending Jan. 16.

 

In CBOT pit trades, Rand Financial bought 300 July, and Rosenthal bought 300 March. JP Morgan sold 400 March. Funds were seen to be even.

 

 

Kansas City Board of Trade

 

KCBT wheat futures saw little buying interest after volatility earlier in the week, a source said. Prices mainly followed activity in CBOT corn, he said.

 

Weather forecasts for improved soil moisture in the Southern Plains are bearish, the source noted.

 

The Southern Plains will get snow averaging up to an inch across the region in the next 24 to 48 hours, Meteorlogix reported.

 

West Texas and the southern Panhandle could see a foot of snowfall, the weather firm noted. Moving north, the levels drop gradually until the snow mostly stops somewhere in Kansas, Meteorlogix said.

 

"Soil moisture levels will benefit from the precipitation, and snow cover protects the winter wheat crop if temperatures drop to damaging levels," the firm said.

 

 

Minneapolis Grain Exchange

 

Profit-taking and pressure from CBOT corn pushed MGE wheat futures prices lower, a floor sources said.

 

Still, MGE saw significant buying interest in the new crop, he noted. Prudential, JP Morgan and UBS were noted buyers of December 2007 wheat, the source said.

 

There are "ideas that we are going to lose spring wheat acres to corn," he added.