US Wheat Review on Friday: Stumbles on firm dollar, big supplies

 

 

U.S. wheat futures closed weaker and neared one-month lows Friday on pressure from ample world supplies and the bearish influence of a rising U.S. dollar.

 

Chicago Board of Trade July wheat closed down 10 cents at US$5.84 3/4, down 38 1/4 cents on the week. Kansas City Board of Trade July wheat lost 7 1/2 cents to US$6.37, and Minneapolis Grain Exchange July wheat shed 1 1/2 cents to US$7.32 1/2.

 

CBOT wheat has ended lower each day since the U.S. Department of Agriculture on Wednesday raised estimates for new-crop ending stocks. The USDA pegged world carryout for 2009-10 at 183 million tonnes, up 800,000 tonnes from its May estimate, and U.S. carryout at 647 million bushels, up 41 million bushels from May.

 

"You just have a persistent reminder of those heavy stocks," said Joe Victor, vice president of marketing for Allendale.

 

Weakness in CBOT soy and corn helped open the door for wheat to slide, analysts said. Soy and corn fell on the firm dollar, pre-weekend profit-taking and technical selling, traders said.

 

A stronger dollar is seen as bearish for grains because it makes U.S. wheat less competitive for export business. Funds also have been using a lower dollar as a catalyst to buy commodities and sold on the higher greenback, an analyst said. Commodity funds sold an estimated 4,000 contracts at the CBOT.

 

CBOT July wheat trimmed losses after hitting an open outcry session low of US$5.77 1/2. That was its lowest price since May 18.

 

 

Kansas City Board of Trade

 

KCBT July wheat closed down 38 cents on the week. The nearby contract pared losses after hitting a session low of US$6.28, its lowest price since May 18.

 

The firm dollar and expectations that harvest activity will pick up weighed on KCBT wheat, traders said. The anticipation that new supplies will come online is bearish, although yields in Texas and Oklahoma are expected to be low due to drought, an analyst said.

 

 

Minneapolis Grain Exchange

 

MGE July wheat closed down 11 cents on the week. The contract recovered after hitting a session low of US$7.19 1/2, its lowest price since Monday.

 

MGE hard red spring wheat futures did not fall as far as CBOT soft red winter wheat because the markets were building in a quality premium, traders said. HRS wheat, used to make bread, is prized for its high-protein content, while SRW wheat, used in pastries and snack foods, has less protein.

 

Cool, wet weather in the northern U.S. Plains delayed spring wheat planting this season, raising worries about the potential for reduced acreage and yields. MGE September wheat, which represents the new crop, closed down 2 cents at US$7.26 1/4.