January 30, 2010

 

US Wheat Review on Friday: Slides on firm dollar, abundant supplies

 

 

A rally in the U.S. dollar and abundant wheat supplies on Friday pushed U.S. wheat futures to their lowest prices since early October.

 

Chicago Board March wheat ended down 13 cents, or 2.7%, at US$4.74 a bushel. Kansas City Board of Trade March wheat lost 7 3/4 cents, or 1.6%, to US$4.87. Minneapolis Grain Exchange March wheat dropped 7 3/4 cents, or 1.5%, to US$5.00 3/4.

 

There was general weakness in commodities as the dollar rallied to its highest level since August against major competitors. A strong U.S. gross domestic product report boosted the greenback, as grains, crude oil and gold took a dive.

 

CBOT March wheat hit a session low of US$4.71 1/2, its lowest price since Oct. 6. The contract has technical support in the area from US$4.20 to US$4.60, a broker said.

 

Hefty U.S. wheat ending stocks continue to be seen as unsupportive for prices, analysts said. Export demand has lagged due to competition for business from foreign countries.

 

The markets have been in a "tough-to-rally mode" amid bearishness about the weak supply and demand storyline, a trader said. CBOT March wheat closed down 24 1/2 cents on the week and 67 1/2 cents for the month.

 

Commodity funds sold an estimated 4,000 contracts.

 

 

Kansas City Board of Trade

 

KCBT March wheat finished near its session low of US$4.85, which was its lowest price since Oct. 6. The contract ended down 15 cents on the week and down 49 1/4 cents for the month.

 

Looking toward spring, Weak prices will discourage producers from applying fertilizer to winter wheat when it breaks dormancy, a trader said. The crop goes dormant for the winter to protect itself from the cold but starts growing again once the weather warms up.

 

 

Minneapolis Grain Exchange

 

MGE March wheat closed just above its session low of US$5, its lowest price since Oct. 5. The contract ended down 11 3/4 cents on the week and 44 1/4 cents for the month.