January 30, 2009

U.S. wheat futures stumbled Thursday on spillover selling from neighboring markets and disappointing export demand, traders said.

 

Chicago Board of Trade March wheat ended down 17 1/4 cents at US$5.78 a bushel. Kansas City Board of Trade March wheat sank 18 cents to US$6.08, and Minneapolis Grain Exchange March wheat lost 15 1/2 cents to US$6.57 3/4.

 

CBOT March wheat had trouble recovering after it fell below support at US$5.80 in early dealings, a floor trader said. Sell stops were hit as the contract dropped to an open outcry session low of US$5.75, a fresh low for the week that is just above the next support level at US$5.70 to US$5.72, he said.

 

CBOT soybeans and corn also spent the day in negative territory, which kept pressure on wheat, a trader said. March soybeans closed down 12 cents, while March corn closed down 2 3/4 cents.

 

"I think you're looking at the neighboring markets being lower," said Greg Wagner, senior commodity analyst for AgResource Co. "I think it's just a down deal."

 

Total weekly U.S. wheat export sales of -56,500 tonnes were well below trade estimates of 300,000 to 500,000 tonnes. Sales for delivery in the 2008-09 marketing year were 23,500 tonnes, a marketing-year low, according to the U.S. Department of Agriculture.

 

Previously announced cancellations of 356,000 tonnes of hard red winter wheat by Nigeria were largely responsible for the low sales. Nigeria canceled purchases of 276,000 tonnes for delivery in 2008-09 and 80,000 tonnes for delivery in 2009-10. Sales of soft red winter wheat, traded at the CBOT, for delivery in 2008-09 were 71,600 tonnes, up from 4,600 tonnes last week, the USDA said.

 

CBOT March wheat slipped below its 20-day moving average at US$5.91 but stayed above other major moving averages. The 50-day moving average is near US$5.61.

 

The markets continued their back-and-forth trend, closing lower Thursday after rising Wednesday, falling Tuesday and rising Monday. Commodity funds sold an estimated 3,000 contracts.

                           

                      

Kansas City Board of Trade

 

Weak export sales pressured KCBT wheat, traders said. The negative report was "psychologically" bearish, even though Nigeria's cancellations had already been announced, a trader said.

 

Net sales of HRW wheat, traded at the KCBT, for delivery in 2008-09 were -248,100 tonnes, according to the USDA. Net sales for delivery in 2009-10 were -80,000 tonnes.

 

"It's kind of hard to ignore," Wagner said of the report.

 

Egypt's state-owned General Authority for Supply Commodities, or GASC, said Thursday it was tendering to buy 55,000 to 60,000 metric tonnes of wheat on a free-on-board basis. The results of the tender should help give the markets direction Friday, as traders will look to see how competitive the U.S. is on the world market, an analyst said.

                      

               

Minneapolis Grain Exchange

 

MGE wheat settled lower with CBOT and KCBT. Nearby contracts all closed three cents above their session lows, with MGE March wheat above its low of US$6.54 3/4.

 

Weekly sales of hard red spring wheat, traded at the MGE, were 34,400 tonnes, compared to 178,500 tonnes the previous week, according to the USDA. The sales were seen as weak, an analyst said.