US Wheat Review on Tuesday: Weakens on technical selling, big supply

 

 

Technical selling, pressure from other markets and a lack of fundamental support pushed down U.S. wheat futures Tuesday in choppy trading.

 

Chicago Board of Trade March wheat ended down 4 1/4 cents, or 0.9%, at US$4.94 a bushel. Kansas City Board of Trade March wheat lost 1 1/2 cents, or 0.3%, to US$4.99 1/2. Minneapolis Grain Exchange March wheat fell 2 cents, or 0.4%, to US$5.10 1/4.

 

Large U.S. and world ending stocks continue to loom over the markets and pressure old-crop wheat, analysts said. Prices need to remain weak to attract export demand, they said.

 

"For the importers part, it's a buyers' market," a broker said. "There's no reason to pay up for it."

 

Egypt's state-owned wheat buyer announced after the close of trading that it was tendering to buy wheat, traders said. The U.S. continues to face stiff competition for sales to Egypt from the Black Sea region, they said.

 

CBOT March wheat hit a session low of US$4.91 1/2, just above technical support at US$4.90, an analyst said. Below that, the contract has support at US$4.80, he said. Upside resistance is seen at US$5.02.

 

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

 

 

Kansas City Board of Trade

 

Wheat felt spillover pressure from weakness in neighboring CBOT corn and from gains in the U.S. dollar, traders said. A strong dollar is often seen as unsupportive because it makes U.S. wheat less attractive to foreign buyers.

 

March corn finished down 5 1/2 cents at US$3.62 1/4. Corn and wheat are linked because funds often trade in a basket of commodities and both grains are used to make animal feed.

 

"The recent break in prices have brought in slightly improved exports, but not enough to drive wheat prices on its own, leaving wheat in a follower's call to corn and (soy)beans," according to a note from PFG Best.

 

 

Minneapolis Grain Exchange

 

The U.S. Department of Agriculture on Friday said weekly U.S. wheat export sales for delivery in 2009-10 were a marketing-year high. The next report, due out Thursday, could show another solid week of sales, traders said.

 

However, there is a "lack of trust that we're going to be able to maintain the current export sales pace unless we keep the market under pressure," a broker said.