US Wheat Review on Friday: Drops Friday on firm dollar, big supply

 

 

U.S. wheat futures fell Friday amid pressure from a firm U.S. dollar and a weak fundamental story line, but the markets finished higher for the week.

 

Chicago Board of Trade March wheat fell 7 cents, or 1.4%, to US$4.86 1/2 per bushel. Kansas City Board of Trade March wheat lost 6 3/4 cents, or 1.3%, to US$4.94 1/2. Minneapolis Grain Exchange March wheat dropped 6 cents, or 1.2%, to US$5.04 1/2.

 

The markets weakened after having risen recently on technical buying and short-covering, traders said. Although fundamentals did not change, CBOT March wheat advanced 36 1/2 cents from last week's low of US$4.66 1/2 to this week's high of US$5.03, which was hit Wednesday. The contract ended up 13 1/4 cents on the week.

 

Prices retreated Thursday and Friday after being unable to sustain the upside move above resistance at US$5.04 for CBOT March wheat, a trader said. It seemed some trend-following funds put on short positions again after recent covering of short positions, said Tim Hannagan, analyst for PFG Best.

 

Commodity funds sold an estimated 3,000 wheat contracts at CBOT.

 

CBOT March wheat has technical support at US$4.78, a CBOT floor trader said. Its session low was US$4.80.

 

 

Kansas City Board of Trade

 

KCBT March wheat finished near its session low of US$4.90 3/4. The contract ended up 10 cents on the week.

 

Strength in the U.S. dollar and weakness in outside markets were a negative influence on wheat early Friday, traders said. Losses in crude oil, precious metals and equities set a bearish tonnee, they said.

 

The dollar rallied after China moved to rein in bank lending, which raised worries about a potential economic slowdown. A strong dollar is often seen as not being supportive for U.S. grains because it makes them less attractive to foreign buyers.

 

 

Minneapolis Grain Exchange

 

MGE March wheat finished near the middle of Friday's range of US$5 to US$5.10. The contract ended up 2 cents on the week.

 

Wheat's fundamental story line is not supportive because U.S. supplies are large, and export sales are lagging. Demand for U.S. wheat looks "routine," a trader said.

 

The U.S. Department of Agriculture in its weekly report said total U.S. wheat export sales were 577,700 tonnes, above trade estimates for 250,000 to 500,000 tonnes. The bulk of the sales were white wheat, which is not traded on an exchange.