US Wheat Review on Thursday: Stumble on fundamentals, outside markets

 

 

U.S. wheat futures stumbled Thursday, backpedaling from prior gains on bearish underlying fundamentals and commodity negative outside market influences.

 

Chicago Board of Trade May wheat ended 13 1/2 cents lower, or 2.62%, at US$5.02 1/4, Kansas City Board of Trade May wheat settled 10 1/4 cents lower, or 1.98%, at US$5.07 3/4, and Minneapolis Grain Exchange May wheat finished 7 1/4 cents lower, or 1.38%, at US$5.19 3/4.

 

Disappointing weekly export sales data served as the catalyst for the market's fundamental pressure, reflecting the lack of competitiveness of U.S. wheat in world markets.

 

"U.S. wheat is expensive and with global supplies quite heavy, it's hard to attract world importers," said Sterling Smith, market analyst with Country Hedging in St. Paul, Minn.

 

The U.S. Department of Agriculture reported net weekly U.S. wheat export sales of 104,100 metric tonnes, mostly for 2009-10 marketing year. Sales were well below analyst guesses of between 250,000 and 550,000 metric tonnes, and down from 409,000 the prior week.

 

Broad-based commodity weakness added to the bearish psychology of the market, as the noticeably stronger U.S. dollar cast a negative cloud over futures prices.

 

A sharp bounce in the U.S. dollar weighs on commodity prices due to perceptions it decreases investors' appetite for risk and makes U.S. grain cost more in world markets.

 

The wheat market doesn't have the fundamental base to support a rally in the face of weak outside market influences, Smith said. When you add a stronger dollar to a bearish fundamental picture, you have the recipe for a break in prices, he added.

 

Improving winter wheat crop conditions in the U.S. southern Plains and fears of increased global exports in a market already cluttered with large world supplies provided some underlying weakness to aide the lower tonnee.

 

In CBOT trades, speculative fund selling was estimated at 3,000 lots.

 

Internationally, India is considering allowing wheat exports from its bulging federal stocks to free up storage space for the next crop, which is set to touch a record of more than 80 million metric tonnes.

 

Federal Food and Agriculture Minister Sharad Pawar on Thursday said a panel of ministers will decide on whether to open up wheat exports at its next meeting, scheduled for later this month.

 

 

Kansa  City Board of Trade

 

KCBT wheat ended lower, following the lead of Chicago wheat in the face of bearish export demand, a KCBT wheat trader said.

 

 

MGE wheat futures ended lower, in tune with other wheat markets. The rise in the U.S. dollar and bearish world supply side fundamentals combined to pressure prices, traders said.