US Wheat Review on Monday: Tumbles on spillover, economic gloom

 

 

U.S. wheat futures tumbled Monday on pressure from weakness in other markets and concerns about the global economic slowdown.

 

Chicago Board of Trade May wheat fell 15 1/2 cents to US$5.06 a bushel. Kansas City Board of Trade May wheat dropped 13 cents to US$5.47, and Minneapolis Grain Exchange May wheat lost 13 1/4 cents to US$5.95 1/4.

 

Losses in equities and crude oil and strength in the U.S. dollar set a bearish tonnee for the grains, said Jim Gerlach, president of AC Trading. Falling CBOT corn and soybeans added to pressure for wheat, traders said.

 

There are worries the economic slowdown will eat away at demand for grains, one analyst said.

 

However, "food commodity demand tends to be relatively inelastic," said Dale Durchholz, an analyst for AgriVisor.

 

"The grain fundamentals, they don't matter" because the outside markets dominated the markets, he said. Trading was taking place in a "real emotional environment."

 

Grains could see a bounce in a 'turnaround Tuesday' scenario, as the markets are "oversold," another analyst said. Commodity funds sold an estimated 3,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

A "doom and gloom" attitude surrounding the economy weighed on KCBT wheat, a trader said. Traders stayed on the sidelines due to the weak outside markets, he said.

 

Dryness in the U.S. Plains remains a concern, but it was overshadowed by the macroeconomic story, an analyst said.

 

Moisture needs "to increase during the latter half of March to avoid potential threats to yield potential," Cropcast Agricultural Weather said in a forecast.

 

"People are kind of keeping 1/4 of their eye on" weather forecasts amid worries about Texas' crop, a KCBT floor trader said. "This is typical talk this time of year," he said.

 

 

Minneapolis Grain Exchange

 

Weak outside and neighboring markets kept MGE wheat on the defensive, traders said. Wheat was dragged lower by the other markets, they said.

 

Weekly U.S. wheat export inspections of 8.664 million bushels were below analysts' expectations of 12 million to 17 million. The inspections were "pretty disappointing," one trader said.

 

"That certainly didn't help things," the trader said.