US Wheat Review on Tuesday: Falls on spillover selling, ample supply

 

 

U.S. wheat futures closed near session lows Tuesday as selling spilled over from losses in Chicago Board of Trade corn and as bearishness persisted about large global supplies.

 

Chicago Board of Trade May wheat ended down 9 3/4 cents, or 2%, at US$4.76 3/4 a bushel. Kansas City Board of Trade May wheat dropped 9 cents, or 1.8%, to US$4.85. Minneapolis Grain Exchange May wheat sank 6 1/4 cents, or 1.2%, to US$5.05.

 

A 1.9% drop in corn dragged down wheat, which has become a follower of other markets because its supply-and-demand story is well known, an analyst said. The markets are linked because both grains are used for animal feed.

 

Tuesday's losses wiped out small gains from Monday. Choppy trading is expected to continue this week as traders wait for the U.S. Department of Agriculture to issue its quarterly reports on grain stocks and prospective plantings on March 31.

 

"For the most part, I think we're just chopping around in front of next week's reports," said Alan Brugler, president of Brugler Marketing & Management. "Wheat probably has some downward bias for that give-back because of the world fundamentals."

 

CBOT May wheat finished a penny above its session low of US$4.75 3/4. Commodity funds sold an estimated 3,000 contracts at CBOT.

 

 

Kansas City Board of Trade

 

KCBT May wheat ended near its session low of US$4.84 1/2.

 

Weakness in CBOT corn and strength in the dollar set a negative tonnee for KCBT wheat, a trader said. It seemed there was a "general washout" in agricultural commodities, with corn, soy, wheat, rice and livestock finishing lower, Brugler said.

 

Wheat continues to lack a supportive fundamental storyline because world supplies are ample and there is stiff competition for export business. U.S. wheat is too expensive to be competitive for export sales to price-sensitive buyers, traders said.

 

 

Minneapolis Grain Exchange

 

MGE May wheat settled just above its session low of US$5.04 3/4.

 

The USDA's prospective-plantings report will be a bigger deal for corn and soy than for wheat, but wheat traders are still eager to see acreage estimates. The government will issue a forecast for plantings of hard red spring wheat, planted in the northern Plains and traded at the MGE.

 

Plantings of winter wheat, traded at the CBOT and KCBT, are widely known already. Winter wheat was sown in the autumn.