US Wheat Review on Thursday: Drops as grains' earlier strength fades

 

 

U.S. wheat finished a mixed trading day in losing territory, after its support in the neighboring corn pit slipped.

 

Chicago Board of Trade March wheat lost 4 1/2 cents to US$5.38 3/4 per bushel, at the lower end of a 15 1/2-cent trading range. May wheat dropped 4 1/2 cents to US$5.51 1/2. Kansas City Board of Trade March wheat shed 3 cents to US$5.75, and Minneapolis Grain Exchange March wheat slipped 1 3/4 cents to US$6.39 1/2. Speculative funds bought an estimated 2,000 contracts at the CBOT, according to midday estimates.

 

The day's low-volume trade was mostly spread-related, a CBOT floor trader said.

 

Tracking a sideways-to-lower band, wheat's price action is struggling, the trader added.

 

When corn gave up the strength it demonstrated earlier in the day, everything else followed, said analyst Vic Lespinasse of grainanalyst.com.

 

The outside markets presented negative signals - with crude oil down by more than US$1 and equities markets posting triple-digit losses.

 

Traders were not surprised Thursday to see Egypt's state-owned wheat buyer, the General Authority for Supply Commodities, buy up to 120,000 metric tonnes of Russian wheat in a tender, on a free on board basis.

 

Of the total, GASC purchased 25,000-30,000 tonnes of Russian wheat from Egyptian traders at US$186.75/tonne, Nomani Nomani, undersecretary of the vice chairman of GASC, told Dow Jones Newswires.

 

The freight offer accepted for that shipment was US$8.25/tonne, he said.

 

GASC also bought three cargoes, each 25,000-30,000 tonnes of Russian wheat at US$185/tonne with a freight offer of US$12/tonne, Nomani said.

 

Also in global trading news, Argentina has authorized new exports of corn and wheat from the 2008-09 harvest, days after modifying regulations so it is easier to calculate amounts available for export from each harvest, a press official at the country's agricultural trade office said Thursday.

 

ONCCA, as the trade office is called, is allowing exporters to ship six million metric tonnes of corn and 520,000 tonnes of wheat from this season's expected output, it said in a statement posted on its Web site late Wednesday.

 

The move is designed "to ensure domestic supplies and constant exports," it said.

 

Baseline wheat trade projections released Thursday by the USDA predict U.S. wheat will capture 21.9% of the world's wheat market share in the 2008-2009 marketing year and grow it percentage to 22.7 in 2009-2010. The USDA baseline projections predict U.S. wheat share will make modest gains through the 2011-2012 season.

 

 

Kansas City Board of Trade

 

Most the macro-economic news has been digested and the market continues to talk about Argentine weather and drought in the hard red winter wheat growing areas, but market participants at the KCBT found little inspiration to trade Thursday.

 

"Overall it was kind of a slow trade today," a KCBT floor trader said. "The March-May spread in a little at 9 1/2-9 /34 with an 11-cent range on March.

 

Cash markets were strong in corn and soybeans offered underlying support, the trader added.

 

 

Minneapolis Grain Exchange

 

Hard red spring wheat also ended lower.

 

As a stand-alone entity U.S. wheat is pretty solid where it is, but "the downdraft in the world is bringing us with it," a Minneapolis-based trader said.

 

Grains and metals were exhibiting strength in the midday, but ended up being dragged down by crude oil, the trader said.

 

"The only good news is today's export sales," he added.