March 3, 2007

 

US Wheat Review on Friday: Corn, speculative liquidation press wheat lower

 

 

U.S. wheat futures finished lower Friday, dragged down by the weakness in corn futures and continued speculative liquidation, floor traders said.

 

CBOT May wheat fell 5 1/4 cents to US$4.73 3/4, KCBT May wheat slipped 1 1/4 cents to US$5.04, and MGE May wheat settled 1 cent lower at US$5.12 1/2.

 

Wheat was influenced by losses in corn and soybeans, said Vic Lespinasse of AG Edwards & Sons.

 

Although the USDA Outlook Forum projections for corn were friendly, the numbers were not a surprise to the market, and corn sold off with wheat following, he said.

 

Weaker outside markets added pressure, with silver and equities markets under pressure, a local trader said.

 

The U.S. Department of Agriculture Outlook Forum released its 2007-08 wheat projections, and the estimates had little market impact as the report did not contain any "surprises," a floor analyst said.

 

The USDA projected 2007-08 wheat planted acreage at 60.0 million acres, with production estimated at 2.17 billion bushels and ending stocks at 506 million bushels.

 

The unwinding of the "carry" trade is a negative for the commodities markets in general, and until it ends, the speculative liquidation in wheat may continue, Lespinasse said. "Carry" trades occur when investors borrow in a currency such as the Japanese yen, since Japan's interest rates are low, and put the money to work elsewhere.

 

On daily open auction technical charts, CBOT May settled just above its 20-day and 40-day moving averages. In CBOT trades, Fortis bought 800 July, Fimat bought 500 May, and Iowa Grain sold 500 May.

 

 

Kansas City Board of Trade

 

Hard red winter futures sold off early, recovered near mid-session and ended lower in choppy, two-sided trading, a KCBT floor trader said. Soybeans and corn were leading the markets lower, the trader noted. Trading activity was quiet, with the market looking for fresh news, but with the nearby month ending above US$5.00, market technicians won a small victory, a floor analyst said.

 

In KCBT spread trades, Man Financial bought 300 May and sold 300 July.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures settled modestly lower as light commercial selling and the weakness across the rest of the grain markets weighed on spring wheat, an MGE floor broker said. Continued poor weather limited cash grain movement, he added.

 

Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the commitment of traders report for the period ending Feb. 27.

 

Monday, the USDA is scheduled to release the weekly export inspections report for the week ending March 1 at 11 a.m. EST (1700 GMT).