US wheat futures closed mostly lower on Tuesday with the bellwether Chicago market pulling back from a six-week high, but Minneapolis spring wheat futures soared to a new top above $13 per bushel.
Confirmation that Argentina would reopen its wheat export registry pressured futures, reversing early rallies at the Chicago Board of Trade and the Kansas City Board of Trade. The move by the Argentine government, effective Thursday, will put 2 million tonnes of wheat on the world market over a five-month period, at a time of scarce global supplies.
"It sounds like they're going to open it up immediately, and I would anticipate some pretty aggressive sales being put on," said Shawn McCambridge, an analyst with Prudential Financial in Chicago. "That's the major force behind Kansas City and Chicago weakness - that, coupled with the recent gains. The longs are just nervous," he said.
At the CBOT, March wheat ended down 19 cents at $9.44 per bushel. The contract traded in a huge range from $9.93, up its daily 30-cent limit and the highest price since December 17, down to $9.39-1/4. Funds sold 4,000 CBOT wheat contracts, traders said.
At the KCBT, March hard red winter wheat fell 9-3/4 cents to close at $9.90-1/4 per bushel. Another bearish sign was the fact that Minneapolis Grain Exchange spring wheat futures came off their highs after trading limit-up for four consecutive days.
"It's looking like the overall wheat market wants to correct," a Minneapolis trader said. The spot MGE March spring wheat contract snapped back to settle up its 30-cent limit at $13.27, an all-time high for any US wheat contract. Trade in options indicated that MGE March was priced at $13.52 to $13.62 at the close, up an additional 25 to 35 cents.
But earlier, the contract dipped to $13.10, and most back months in Minneapolis settled lower. Tight stocks of US wheat, especially high-protein spring wheat, and brisk export demand underpinned the market, along with concerns about spring wheat plantings in 2008.
Traders said the results of a Taiwanese wheat tender could indicate whether US spring wheat prices have risen high enough to slow demand. Taiwan will tender Wednesday to buy 80,000 tonnes of US wheat, including dark northern spring, hard red winter, and soft and hard white wheat.
Wheat futures at all three markets got an early boost from news that Brazil was considering lowering its wheat import tax, which could limit tight world supplies. However, Brazil's government postponed a decision after Argentina said it would resume wheat exports. In other wheat news, India's farm minister said the country's wheat output would exceed 75 million tonnes this year due to favourable weather.
Jordan now has 290,000 tonnes of hard wheat stockpiled, with another 50,000 tonnes being delivered from Syria, which should represent a six-month supply, officials in Amman said. Encouraged by plentiful rains and soaring world wheat prices, Australia is poised to plant a bumper wheat crop for 2008, following one of its worst-ever droughts.
US weather forecasts were mostly benign. There were no signs of crop-damaging cold weather over the next five days in the US Plains HRW wheat region, DTN Meteorlogix said. In Texas, a lack of moisture was stressing the winter wheat crop, USDA said in a weekly report late Monday. USDA said 62 percent of the state's winter wheat was rated poor to very poor by January 27, unchanged from the previous week. But 11 percent of the crop was rated good to excellent, up from 9 percent a week earlier.