US Wheat Review on Tuesday: Drops ahead of USDA crop reports

 

 

U.S. wheat futures settled lower and near session lows Tuesday in front on government crop reports that are expected to show increased estimates for production and ending stocks.

 

Chicago Board of Trade September wheat ended 9 cents lower at US$4.85 1/4 a bushel, just above its open outcry session low of US$4.85. Kansas City Board of Trade September wheat finished 8 1/4 cents lower at US$5.17, and Minneapolis Grain Exchange September wheat dropped 6 1/4 cents to US$5.68 3/4.

 

Traders evened up positions ahead of the release of the U.S. Department of Agriculture's key August crop production and supply/demand reports at 8:30 a.m. EDT Wednesday, analysts said. Bearish expectations for expanding production and carryout left traders with a "Why do I want to buy it attitude," said Dale Durchholz, analyst for AgriVisor.

 

"The report creates to me just a vacuum of anybody wanting to willingly play the long side," he said.

 

The average of analysts' estimates for U.S. all-wheat production is 2.15 billion bushels, up from the USDA's July estimate of 2.112 billion, according to a Dow Jones survey of 16 analysts. The average of analysts' estimates for 2009-10 U.S. wheat carryout is 737 million bushels, up from the USDA's July estimate of 706 million.

 

It appeared as though there were some traders buying CBOT corn and selling wheat during the session, a broker said. Losses accelerated heading into the close. Commodity funds sold an estimated 2,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

KCBT wheat finished lower as the markets retreated from a steady-firmer trade Monday. KCBT September wheat ended at its open outcry session low.

 

The USDA reports are expected to be bigger events for corn and soys than for wheat. Wheat on Wednesday will keep an eye on the neighboring markets for direction, traders said.

 

CBOT corn on Tuesday ended just slightly higher, which did not offer much support to wheat, a trader said. Crude oil was lower.

 

 

Minneapolis Grain Exchange

 

Traders will zero in on estimates for spring wheat and durum production when the production report is released, an analyst said. An increase in the USDA's estimate for spring wheat production is expected to account for much of an all-wheat production increase.

 

The USDA said 72% of U.S. spring wheat was in good-to-excellent condition as of Sunday, up one percentage point from last week. Spring wheat was 8% harvested, down from 15% last year and the average of 31%, the USDA said.

 

Chatter about the potential for cold weather or possibly a frost to move into the Canadian Prairies around Aug. 20 may have helped underpin MGE wheat, an analyst said. U.S. and Canadian wheat are behind the normal pace of development due to late planting and a cool summer.