US Wheat Review on Thursday: Slides in setback from rally

 

 

U.S. wheat futures slumped Thursday in a setback from a rally to one-month highs and amid an absence of fund-related buying.

 

Chicago Board of Trade March wheat fell 9 1/2 cents to US$5.57 3/4 a bushel, Kansas City Board of Trade March wheat sagged 10 1/4 cents to US$5.50 1/4, and Minneapolis Grain Exchange March wheat sank 8 cents to US$5.63 1/2.

 

Prices pulled back after climbing Wednesday. The markets had jumped on index-fund buying or anticipation of the buying as part of a rebalancing of positions, traders said.

 

"Yesterday we probably came a little bit too far too fast based on that money coming in," said Jason Britt, president of Central State Commodities. "We pulled some of that off."

 

There was broad-based weakness in commodities Thursday, with corn, soy, crude oil and gold sagging. Strength in the U.S. dollar weighed on commodities as investors grew concerned about global growth after China raised a key interbank market interest rate, an analyst said. The increase could be "the first stop of several" in a move to reduce consumption and fight inflation, a CBOT trader said.

 

Commodity funds sold an estimated 2,000 wheat contracts at CBOT.

 

 

Kansas City Board of Trade

 

Weekly U.S. wheat export sales were unsupportive and "dismal," a trader said. Export sales for the week ended Dec. 31 were a marketing-year low of 93,400 tonnes, according to the U.S. Department of Agriculture.

 

U.S. wheat is too expensive to be competitive on the world market, while the end of the year is historically a slow time for business, traders said. Weekly export sales of hard red winter wheat were 72,000 tonnes, and sales of soft red winter wheat were 14,800 tonnes.

 

"When (fund buying) is absent and we get back to our supply and demand issues, I think you find a little weakness like we did today," Britt said.

 

 

Minneapolis Grain Exchange

 

MGE wheat backpedaled from Wednesday's gains amid pressure from neighboring and outside markets, traders said. The stronger dollar set a bearish tonnee for commodities, they said.

 

Traders are looking forward to USDA crop data due out Jan. 12. The government is expected to raise its forecast for U.S. wheat carryout slightly from last month.