US Wheat Review on Thursday: Sags to new lows without spillover support

 

 

U.S. wheat futures crumbled to new contract lows Thursday amid a lack of spillover support from other markets and technical selling.

 

Nearby Chicago Board of Trade May wheat hit a contract low of US$4.64 1/2 a bushel, below its previous low of US$4.72. It settled down 9 1/2 cents, or 2%, at US$4.66 1/2.

 

Kansas City Board of Trade May wheat fell 8 1/2 cents, or 1.8%, to US$4.76 3/4. Minneapolis Grain Exchange May wheat lost 5 1/2 cents, or 1.1%, to US$4.97 3/4.

 

Prices tumbled with neighboring CBOT corn and soy. Wheat needs support from other markets to rise because large global supplies and stiff competition for export business are fundamentally bearish, an analyst said.

 

"There was just no support from the other markets whatsoever," said Shawn McCambridge, analyst for Prudential Bache. "Market fundamentals are bearish for the wheat. The path of least resistance is going to be lower."

 

CBOT wheat will continue to make new contract lows without support from other markets, McCambridge said. The May contract's next downside price objectives are US$4.50 and then US$4.25 1/4, he said.

 

Commodity funds sold an estimated 6,000 contracts at CBOT.

 

 

Kansas City Board of Trade

 

KCBT May wheat hit a contract low of US$4.75 1/2, below the previous low of US$4.81 1/4.

 

Talk about sales of European wheat to Latin America didn't help the markets, a trader said. Latin America has historically been a customer of the U.S. due to its proximity, but French wheat costs less than U.S. wheat and ocean freight rates are affordable, he said.

 

 

Minneapolis Grain Exchange

 

MGE May wheat hit a new contract low of US$4.97 1/2, below its previous low of US$5.00 1/2.

 

There are limited opportunities to tighten the U.S. or global balance sheet in the upcoming crop year because production prospects look "quite promising," McCambridge said. The International Grains Council on Thursday projected the world in 2010-11 will produce a third consecutive bumper crop and that global stocks will hit a nine-year high.