January 16, 2010

 

US Wheat Review on Friday: Extends losses on spillover, big supplies

 

 

Spillover pressure from other markets and bearishness about large supplies pushes U.S. wheat futures sharply lower Friday and to steep losses for the week.

 

Chicago Board of Trade March wheat fell 17 3/4 cents to US$5.10 a bushel, down 58 1/2 cents for the week. Kansas City Board of Trade March wheat dropped 15 cents to US$5.12, and Minneapolis Grain Exchange March wheat sank 16 1/4 cents to US$5.20 1/2.

 

Wheat slid with neighboring CBOT corn and soybeans and with crude oil, gold and silver. Strength in the U.S. dollar was bearish for the grains because it encourages the perception that U.S. commodities are less attractive to foreign buyers, said Sid Love, analyst for Kropf & Love Consulting.

 

"It just seems like sort of a national down day," Love said.

 

CBOT March wheat closed just above its session low of US$5.09. The market will keep an eye on neighboring CBOT corn for direction next week because corn is the "driver" of the grains, Love said.

 

Corn is facing pressure from the U.S. Department of Agriculture's estimate for a massive U.S. crop. March corn ended down 9 1/2 cents at US$3.71 1/2.

 

"You've got to find a bottom to corn," Love said. "Where that is, I don't know."

 

Commodity funds sold an estimated 3,000 wheat contracts at CBOT.

Kansas City Board of Trade

 

KCBT March wheat closed down 48 cents on the week. The contract closed near its session low of US$5.11 1/2.

 

Large U.S. wheat ending stocks provide a cushion against an estimated 14% year-on-year decline in U.S. winter wheat plantings. Stocks are at a 22-year high, according to the USDA.

 

"Even though we could have a much smaller crop the next year, people are saying there's still too much," Love said.

 

 

Minneapolis Grain Exchange

 

MGE March wheat closed down 54 1/2 cents on the week. It closed above its session low of US$5.15 1/2.

 

Weak export demand continues to be bearish for wheat, traders said. There is stiff competition for business because world supplies are ample, they said.