Wed 01 May 2013 07:37:45 CT
Grain markets are trading down overnight led by Chicago wheat. Physical commodity markets are struggling with copper, crude oil, and the Dollar down but US stocks indices are probing into positive territory. Traders will keep a close eye on the FOMC statement later today. There were 460 May Chicago wheat deliveries overnight taking the month-to-date total to 1,064.
The Chicago July contract advanced to its highest level since March 28th yesterday as strong demand and firm cash markets provide support for the bull camp. Delivery stocks continue to deteriorate in the east which is supportive to the nearby spreads as traders pull wheat out of delivery space due to its discount to the cash market. Some traders indicated that Chicago wheat trains were moving into southwestern US feedlots at a 15-17 cent per bushel discount to Kansas City trains. The European wheat markets continue to trade in stride with the US with their weather conditions much more favorable than those of the western US plains. Temperatures in France will remain slightly below normal but no late spring freezes are expected. The cooler temperatures will keep wheat growth behind schedule. Traders in Poland suggested weather was good for winter grain development but temperatures continue to be rather low. Open interest declined by 5,504 contracts and volume was estimated 143,054. The positioning data suggests short covering which is consistent with the rather large trend-following fund short. Some commodity weather analysts suggest the state of Ohio may see freezing temperatures by May 10th to the 13th but confidence is low at this point.
The wheat market managed to climb off session lows early yesterday morning and ended up leading the complex to the upside on more weather concerns both in the US and internationally. Cool temperatures in the western plains as well as areas of the eastern Corn Belt by the second week of May forced traders to cover shorts while the technical picture improves by the day. Another round of freezing temperatures will settle into western NE, eastern, CO, western KS, western OK, and north Texas by this Friday which may cause additional damage to the KC crop. KC and Chicago wheat fell over 1% overnight as traders continue to weigh the impact of freeze damage in the west against the lackluster demand for US hard red winter wheat to finish up the 2012/13 marketing year as well as the next marketing year.
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