April 7, 2004

US Wheat Review On Tuesday: CBOT Reverses, Pops Back Higher On Close
 
In the final minutes of Tuesday's trade, Chicago Board of Trade wheat futures jumped up to end higher, reversing from the lower trend seen for most of the session.
 
The trade "was choppy in here and then Fimat came in to buy. There was nothing for sale so they had to bid it up," summarized one CBOT wheat pit trader.
 
Fimat bought about 500 May and 200 Jly in the late activity, CBOT traders said.
 
Earlier in the session light fund selling had pressure prices lower, but lost steam after failing to violated the recent low of $4.06 1/2 per bushel in CBOT May. Over the last four trading days, CBOT May has found support at that level.
 
The comeback in wheat occurred without the support of the CBOT corn and soybean markets, which still finished the day lower.
 
CBOT May wheat finished up 2 1/2 cents at $4.16 1/2. Trailing along, Kansas City Board of Trade May came back late to end up 2c at $4.19 3/4, while Minneapolis Grain Exchange May settled 2c lower at $4.39.
 
For most of the session, choppy price action was seen due to a lack of clear market direction. Many traders are starting to mark time ahead of Thursday's U.S. Department of Agriculture supply and demand reports, while others are beginning to keep a closer tab on the weather.
 
Global Weather Services forecasts that a wet weather system will move eastward across the Plains Friday, producing a widespread area of rain through Texas into Oklahoma, Kansas and Nebraska hard red winter wheat regions.
 
Kansas is likely to see the best chance for significant rainfall Friday. Rainfall totals of 0.35 to 0.85 inch will be common in most locations, while higher totals of 1.00 to 1.15 inches are possible in a few areas, particularly across Kansas. Rain is seen highly valuable for the developing HRW wheat crop, especially for the dry western regions.
 
But the wet weather could also be followed by some below freezing temperatures. GWS said temperatures could fall into the upper 20s Fahrenheit to around freezing Monday from Colorado into Nebraska and Kansas, as well as northwestern areas of Oklahoma.
 
With plants just starting to joint, temperatures have to drop to around 20 to 24 degrees before damage occurs. As of Sunday, 27% of the Kansas wheat crop was in the jointing stage of production.
 
Late Monday, the first national winter wheat ratings for the U.S. 2004 crop came in at 48% good to excellent, which is down from 51% from the same time last year. The GWS winter wheat condition index pointed to below-average HRW wheat conditions, but above-average soft red winter and soft white winter wheat crops.
 
In Europe, French and German winter wheat plantings escaped the winter with virtually no frost damage and winterkill has been kept to a minimum. Most areas have also benefited from sufficient rainfall, following last season's dry summer.
 
CHICAGO BOARD OF TRADE
 
CBOT May came back late with the last-minute buying by Fimat to hit a late top of $4.19. The contract high set Monday sits farther above the market at $4.24.
 
Earlier in the session May had fallen to match the low seen in two of the previous three sessions at $4.06 1/2.
 
Funds ended the session close to net even, but are said to still be long just over a net 40,000 lots.
 
Ahead of the close, trade was thin and scattered. Some of the featured trades included, Goldenberg Hehmeyer selling 300 Jly and Refco selling 200 Jly. On the other side, R.J. O'Brien and Cargill Investor Services had each purchased about a net 300 May.
 
KANSAS CITY BOARD OF TRADE
 
KCBT May ended the session higher, following the CBOT. Earlier in the session, May had fallen back to trade at a four-session low of $4.10 1/2. But overall both the May and Jly contracts are situated about the middle of the range traded since late March.
 
Following showers in eastern and central Kansas, the states crop improved 6 percentage points to be rated at 43% good to excellent.
 
ADM Investor Services sold 300 May and Refco sold 200 May. Man Financial sold 250 Jly, while Country Hedging sold a net 100 Jly. UBS Securities sold 350 Dec and Prudential Securities sold 100 Dec.
 
Cargill Investor Services bought 200 May, while UBS Securities also bought 100 May. ADM Investor Services and Prudential Securities also bought a net 100 Jly each. General Mills purchased 100 Dec.
 
Cargill Investor Services spread 400 Jly/May.
 
Coming into the session, open interest tallied 31,305 lots in KCBT May and 29,252 lots in KCBT Jly.
 
MINNEAPOLIS GRAIN EXCHANGE
 
MGE wheat futures ended lower, with some of the weakness trimmed late following the late comeback in Chicago. Still MGE lost ground to the other wheat markets on the day.
 
MGE wheat futures showed a weaker stance throughout the session. At one point, MGE May traded as much as 12 1/2c lower on the day.
 
Still MGE traders said the weakness come in thin and choppy trade. "It's hard to put a finger on any one thing," said one MGE trader.