US Wheat Review on Tuesday: Slips on spillover pressure, technical selling

 

 

U.S. wheat futures tumbled Tuesday on spillover pressure from other markets and technical selling, traders said.

 

Chicago Board of Trade March wheat sank 9 cents to US$5.56 a bushel. Kansas City Board of Trade March wheat dropped 6 cents to US$5.89, and Minneapolis Grain Exchange March wheat fell 5 cents to US$6.53 1/4.

 

CBOT corn and soybeans were lower, along with equities and crude oil. Losses in the neighboring and outside markets set a bearish tonnee for wheat, traders said.

 

Technical selling was likely triggered as CBOT March wheat fell below major moving averages, an analyst said. The contract closed below its 50-day moving average around US$5.63 1/2.

 

Prices retreated Tuesday after rising Monday. Commodity funds sold an estimated 3,000 contracts at the CBOT.

 

Wheat continues to trade in a broad range, analysts and traders said. CBOT March wheat seems to find support below US$5.50 but struggles near US$6.00, an analyst said. "Wheat's in a box," he said.

 

The U.S. Department of Agriculture's February supply/demand report was a nonevent for wheat, traders said. The 2008-09 U.S. wheat carryout estimate was left unchanged from the USDA's January estimate.

 

World wheat carryover for 2008-09 was estimated at 149.96 million tonnes, up from the USDA's January estimate of 148.4 million. The USDA pegged Argentina's wheat crop at 8.4 million tonnes, down from its January estimate of 9.5 million.

 

"It didn't tell us anything new," an analyst said about the report.

 

 

Kansas City Board of Trade

 

KCBT wheat closed lower on spillover pressure and in a retreat from Monday's gains, a trader said. The setback made sense because there was "no real reason" that prices rose Monday, he said.

 

There is a good amount of demand in the world, but global supplies are ample and there is competition for export business, traders said. It was disappointing that Iraq was preparing to buy 350,000 tonnes of hard wheat from Australia, Canada, Germany and Russia and none from the U.S., they said.

 

"The market still lives and dies on where the export demand goes this time of year," an analyst said.

 

 

Minneapolis Grain Exchange

 

MGE wheat closed lower on spillover pressure from the other markets, traders said. The wheat markets seemed to drift lower without a strong fundamental story, an analyst said.

 

There were no surprises in the class breakdown on the U.S. wheat balance sheet in the USDA report, analysts said. The government kept its estimate for hard spring wheat ending stocks unchanged from last month at 160 million bushels.