April 6, 2004
US Wheat Review On Monday: Lower Finish Seen After Opening Run Higher
U.S. wheat futures finished Monday's session lower, handing back overzealous opening gains and some of last week's strength. This was seen in conjunction with a similar pattern in Chicago Board of Trade corn and soybeans.
Shortly after the open, follow-through buying interest from Friday's strong technical close helped boost all major CBOT wheat futures to new contract highs. However after posting solid gains last week and lacking a fresh bullish highlight, the buying interest quickly faded.
CBOT corn and soybean futures also ran up to tag new highs in the opening moves, but nearby corn months ended slightly lower and nearby soybean futures finished sharply lower.
CBOT May wheat ended 2 1/4 cent lower Monday at $4.14 per bushel. Kansas City Board of Trade May fell 6 1/2c to end at $4.17 3/4, while Minneapolis Grain Exchange May fell 4 1/2c to settle at $4.41.
Weekly wheat inspections came in with ho-hum results, totaling 20.5 million bushels, for the week ended April 1. This is down from 23.7 million bushels one week earlier, but up from 12.3 million for the same period last year. With eight weeks left in the 2003-04 marketing year, inspected shipments are running 31% ahead of last year.
Offering some pressure Monday, the U.S. dollar extended Friday's gains against other major world currencies.
Egypt's main-state wheat buyer, the General Authority for Supply Commodities, could issue a wheat tender by the end of the week for first half of May shipment. After recent gains in U.S. wheat futures, traders will be watching to see if the U.S. can still nab a share of the business. GASC last filled its wheat needs in mid-March with 120,000 metric tons of U.S. wheat.
Late Monday, the USDA is scheduled to issue its first national winter wheat ratings for the 2004 season. Last season, as of March 30, the crop was first listed at 51% good to excellent.
Over the weekend, rainfall missed they key U.S. hard red winter wheat regions. Still scattered showers are possible into Wednesday with the best chances for rain from the near the Kansas-Oklahoma border southward. Some of these locations could receive from 0.10 to around 0.70 inch, Global Weather Services said.
CHICAGO BOARD OF TRADE
CBOT May wheat ended slightly lower after trading a 15c range. In the early price action, CBOT May scored a new contract high of $4.24, surpassing the previous double high of $4.22 3/4 set about two weeks ago.
Funds sold about a net 2,000 lots Monday.
Iowa Grain sold about 1,300 May, while Shatkin Arbor Karlov sold 300 May. On the other side, Term Commodities bought 700 Sep, 300 Jly and 100 Dec. Fimat purchased 400 May and 300 Jly. Man Financial bought 400 May. UBS Securities purchased about 400 May late. Cargill/Cargill Investor Services bought 200-300 May late
Tenco and Prudential Securities each spread 500 May/Jly. Term Commodities spread 200 lots of the same.
Refco bought 800 May $3.70 puts. Prudential Securities sold 500 Jly $4.40 calls.
KANSAS CITY BOARD OF TRADE
KCBT wheat futures fell lower with the rest of the major agricultural complex, falling back after posting gains in the early dealings.
Early on KCBT May reached up to trade at $4.30, which was one cent shy of the contract high posted about two weeks ago. Meanwhile, the deferred months did tag new contract highs.
The National Oceanic and Atmospheric Administration six- to 10-day outlook calls for below-normal temperatures and normal to above-normal precipitation for the winter wheat belt.
Within Monday's price action, Refco bought 200 May and 200 Jly. UBS Securities sold 100 May, 100 Sep. ADM Investor Services sold 400 May and 200 Jly, but also bought 300 Dec. Fimat sold 200 May and 100 to 200 Jly.
MINNEAPOLIS GRAIN EXCHANGE
MGE wheat futures also finished lower after climbing early on. MGE May wheat rallied up to a two-week high of $4.49 1/2 on the open. The contract high sits above the market at $4.53.
May eventually set back to set a low of $4.38, finding support just above Friday's low of $4.37 1/2.
The U.S. spring wheat crop was 6% planted as of Sunday, up from 4% for the same time last year and 4% for the five-year average.