Afternoon wheat commentary: Markets give back much of Tuesday's gains

Futures:  
The choppy trade in grains continues. For wheat, the markets were unable to build off Tuesday's strong performance and struggled to get anything going from start to finish. Overnight was a little weaker, and the selling only intensified once trade moved into the day session. SRW futures traded the weakest - falling to more than 15 cents lower, but KC touched double-digits lower as well. Mpls was immune to much of the weakness and traded only a couple cents lower all day. Ultimately, both Chicago and KC May finished the day around ten cents lower.

One of the top headlines in wheat in what was considered a very light news day was the upcoming weather for HRW wheat country. The forecast calls for much of Colorado and Kansas to see adequate precip in the coming days - areas that are desperately seeking some moisture following months of dryness. This may have aided in some of the weakness, but it was not KC that led to the downside, it was Chicago. And with the European wheat contract (Matif), corn and soy under pressure as well, it is doubtful that the weather forecast had too much influence. Japan bought a little wheat overnight, Jordan passed on their tender, and Algeria and Taiwan's tenders wrap up tomorrow. Aussie wheat prices look to stay competitive through July thanks to their bumper crop, and that will take more of the Asian flour mill demand away from the US. The March WASDE is next week. It usually is not an influential report for wheat, so we can probably expect to see the choppy trade continue.

July KC wheat completed its third upside PriceCount objective and looks to be in the process of correcting. If the market can resume its rally and trade into new highs, we are left with a low percentage fourth count at $8.92. Meanwhile, if the correction can extend to the downside with a couple closes below Tuesday's lows ($6.19 ½), it would activate downside targets off the Feb highs. That first target would be around $5.97.

Export sales will be out in the morning. Last week's sales were quite disappointing, coming in at only 183 TMT combined. China and/or Unknown had become a regular on the report over the past several weeks, but last week China picked up only 1,700 mt, and Unknown cancelled a combined 83 TMT. We had our usual participants such as Bangladesh, Mexico, Japan and the Philippines, but that was about it. Tomorrow's report may be a little better, but not looking for any huge improvements. Look for between 200 and 400 TMT.

There were no deliveries last night in Chicago wheat, HRW wheat, or Mpls wheat. Open interest in Chicago March has fallen to 1,139 contracts, KC March is under 400 contracts, and Mpls March is only 136 contracts.

HRW basis bids saw no change on Wednesday. Bids for 11-pro stayed +103/113, the 11½-pro remained +118/128, the 12-pro stayed +125/+135, the 12½-pro remained +125/135, and the 13-pro remained +113/123. HRW wheat export bids saw little change again on Wednesday. In Feb, ORD stayed +121, the 11-pro firmed one to +124, and the 12-pro stayed +140. For Mar, ORD remained +122, the 11-pro stayed +127, and the 12-pro fell two to +144. For A/M, ORD stayed +120, the 11-pro stayed +125, and the 12-pro remained +145. SRW wheat track bids down to the Gulf saw no change again on Wednesday. March, April and May all stayed 110/125. HRW wheat track bids down to the Gulf also saw no change on Wednesday. March remained 140/150, and April and May both stayed 146/156.

Headline News:
Ukraine economics ministry said wheat exports thus far this marketing year is 13.8 MMT.

Export business this week:
*** Japan bought a total of 82,937 mt of Canadian and US origin wheat. The total included 27,977 mt of Canadian red, 26,960 mt of US HRW, and 28,000 mt of US white wheat.
*** The lowest offer in Pakistan's 300 TMT tender is said to be $332.44/mt. Other offers ranged from $335.99 to $345.00/mt.
*** Jordan made no purchase in their 120 TMT wheat tender that closed today.
*** March 3 Algeria they are in for a nominal 50 TMT of durum wheat (they usually buy much more).
*** March 4 Taiwan is in for roughly 100 TMT of grade 1 US milling wheat.
*** March 4 the Philippines is in for 70 TMT of milling wheat.