May 15, 2008

 

US Wheat Review on Wednesday: CBOT July hits 5-month low on crop outlook

 

 

U.S. wheat futures fell Wednesday on expectations for an increase in world production, with Chicago Board of Trade July wheat closing at a five-month low, traders said.

 

CBOT July wheat finished 31 3/4 cents lower at US$7.64 per bushel, its lowest close since Dec. 3. Kansas City Board of Trade July wheat dropped 24 1/4 cents to US$8.11, and Minneapolis Grain Exchange July wheat slipped 9 cents to US$10.38.

 

The markets continued to feel pressure from projections that the world will grow more wheat in 2008-09 than ever before. The U.S. Department of Agriculture on Friday predicted production would hit a record 656 million tonnes, up 8% from 2007-08 and up 5% from the previous record in 2004-05, after high prices encouraged growers to expand plantings.

 

"I think our wheat crop's coming along pretty good," said Tom Leffler, owner of Leffler Commodities in Augusta, Kan. "We're looking at large increases in U.S. and world ending stocks."

 

Losses accelerated after CBOT July wheat broke through its 200-day moving average in the area around US$7.89, a trader said. The 200-day moving average recently held as a level of support, he said.

 

Weakness in the neighboring CBOT corn market also weighed on wheat amid a lack of fresh news for wheat traders, an analyst said. Commodity funds sold an estimated 3,000 contracts.

 

"This market has been working its way down, and anytime it finds a little upside, it has trouble holding it," Leffler said.

 

 

Kansas City Board of Trade

 

Showers in the U.S. Plains added pressure to KCBT wheat, Leffler said. DTN Meteorlogix's Wednesday forecast called for thunderstorms with moderate to heavy rain from Texas northeast to the eastern Great Lakes.

 

Harvest is approaching in the Northern Hemisphere, and scattered southern U.S. areas have already starting to cut winter wheat.

 

"The wheat market continues to drift lower with plenty of moisture (in) most places," said Don Moneyheffer, owner of Moneyheffer Commodities, in a note to clients.

 

 

Minneapolis Grain Exchange

 

MGE July wheat closed lower after trading firmer during much of the day session. The old-crop contract found early support from bull spreading, with traders buying the July and selling September, a trader said.

 

"The cash market came back a little bit stronger today," a MGE floor trader said. "The spread kind of ran out of steam."