US Wheat Review on Thursday: Sags on bearish outside market influence

 

 

Weak outside markets pulled U.S. wheat futures lower Thursday in a turnaround from Wednesday's rally.

 

Chicago Board of Trade May wheat closed down 8 cents at US$5.15 a bushel. Kansas City Board of Trade May wheat closed down 7 cents at US$5.60, and Minneapolis Grain Exchange May wheat closed down 5 1/2 cents at US$6.00 1/2.

 

Falling equities and crude oil put wheat on path to negative territory and kept the markets there throughout the day session, a trader said. A firm U.S. dollar was another bearish influence.

 

Wheat felt additional pressure from weakness in CBOT corn and soybeans, traders said. Soybeans led the downside of the three markets, with the May contract closing down 16 1/2 cents at US$8.52.

 

Total weekly U.S. wheat export sales of 307,700 tonnes were at the low end of trade expectations, which ranged from 300,000 to 500,000 tonnes. Sales for delivery in the 2008-09 marketing year were 285,200 tonnes, down 39% from the previous week and 30% from the prior four-week average, according to the U.S. Department of Agriculture.

 

"We're not really doing much of anything as far as export sales are concerned," an analyst said.

 

Volume was on the light side, traders said. Market participants are afraid to carry positions overnight because of high volatility in the outside markets, a CBOT floor broker said.

 

"The risk-reward isn't there," he said.

 

Commodity funds sold an estimated 2,000 contracts.

 

 

Kansas City Board of Trade

 

Traders continue to monitor forecasts for the U.S. Plains amid worries about the impact of dryness of hard red winter wheat. A warm-up in the region highlights the need for rain, an analyst said.

 

"I think the thing you've got to look at in wheat is that the outside markets do have an impact, but it's going to be almost 80 degrees out here today," a Kansas-based analyst said. "The wind is blowing, but not much. The condition of the crop is going to go downhill in a hurry if we don't get some rainfall in a hurry."

 

Cropcast Agricultural Weather said its forecast carries near- to above-normal precipitation through the northeastern three-fourths of the hard red winter wheat belt in the 11 to 15 day period. However, "confidence remains low in such an extended-range forecast, so it will be very important to see continued support for this wetter pattern on upcoming model runs," the private weather firm said.

 

 

Minneapolis Grain Exchange

 

MGE wheat followed equities and crude oil lower, traders said. The outside markets continue to be the dominant influence for the grains, they said.

 

"Yesterday the market had some hope because we heard the Chinese were going to bail out their economy," an analyst said.

 

May wheat closed slightly above its session low of US$5.99. Its session high was US$6.14.