US Wheat Review on Wednesday: Slips on bearish supply outlook, weak corn

 

 

U.S. wheat futures sagged Wednesday on expectations for a bearish increase in U.S. carryout and production, with the markets keeping an eye on weak corn futures.

 

Chicago Board of Trade September wheat shed 10 3/4 cents to US$8.25 3/4 per bushel. Kansas City Board of Trade September wheat dropped 8 3/4 cents to US$8.52 1/2, and Minneapolis Grain Exchange September wheat slipped 2 cents to US$8.83.

 

The sell-off came as traders started looking ahead to the release of U.S. Department of Agriculture crop reports due out at 8:30 a.m. EDT Friday. Analysts expect the USDA to raise its forecasts for 2008-09 wheat ending stocks and production due to strong winter wheat yields and solid prospects for the spring wheat crop.

 

The average of analysts' estimates for 2008-09 wheat ending stocks was 538 million bushels, up from the USDA's June estimate of 487 million, according to a Dow Jones Newswires survey of 12 analysts.

 

"All the markets just traded what the perception of the report is," an analyst said. "The majority of the people are expecting an increase in the wheat ending stocks."

 

More positioning is expected Thursday ahead of the release of the reports. Traders who are holders of short, or sold, positions will likely try to cover them before the close, an analyst said.

 

The wheat markets continued to keep an eye on CBOT corn futures, which slipped Wednesday amid fund liquidation. Corn and wheat are linked because both are used for animal feed.

 

Commodity funds sold an estimated 3,000 wheat contracts at the CBOT. Floor activity was thin, traders said.

 

It was an "inside day" for CBOT September wheat, a CBOT floor broker noted. The contract during the day session traded within the range of Tuesday's day session.

 

The market seemed "tired" and was "taking a pause," the broker said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures felt pressure from the setback in CBOT corn, traders said. The ongoing U.S. winter wheat harvest was another bearish factor, they said.

 

There was little bullish enthusiasm about news that Egypt's state-owned General Authority for Supply Commodities said Wednesday it bought 290,000 metric tonnes of wheat, as it was in store, an analyst said. The wheat was for delivery Aug. 15-31.

 

Egypt is a major buyer on the world wheat market but "just didn't do anything that caught anybody by surprise," the analyst said, referring to the purchase.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures closed lower with the CBOT and KCBT. Traders said they were waiting to get their first look at the USDA's estimates for other spring wheat production Friday.

 

The average of analysts' pre-report estimates was 537 million for other spring wheat production and 95 million for durum. In 2007, other spring wheat output was 479 million bushels and durum output was 72 million, according to the USDA.