US Wheat Review on Wednesday: Falls lower on harvest, spillover pressure

 

 

Harvest progress and pressure from other markets knocked U.S. wheat futures to fresh eight-week lows Wednesday as the markets sustained a downward trend.

 

Chicago Board of Trade September wheat dropped 8 cents to US$5.67 3/4 a bushel. Kansas City Board of Trade September wheat lost 6 3/4 cents to close at US$6.07 3/4, and Minneapolis Grain Exchange September wheat stumbled 6 1/2 cents to US$6.86 3/4.

 

Strength in the U.S. dollar, along with losses in CBOT corn and in crude oil, weighed on wheat, traders said. Commodity funds sold an estimated 5,000 contracts at the CBOT.

 

The advancing wheat harvest continues to hang over the markets, said Tom Leffler, owner of Leffler Commodities. It is wheat's seasonal tendency to move lower at this time of year as new supplies come online.

 

Traders digested a U.S. Senate panel's report that blamed excessive speculation by index funds for inflating wheat futures relative to cash prices and hurting convergence. Expectations for increased regulation could have weighed on prices a bit, an analyst said.

 

However, traders have been hearing talk about the potential for increased regulation on and off for a year already, Leffler said.

 

"The trade knows there's probably going to be some changes down the road," he said.

 

CBOT September wheat hit an open-outcry session low of US$5.65 1/2, its lowest price since April 30. The contract has lost more than US$1.35 since June 1.

 

 

Kansas City Board of Trade

 

KCBT September wheat hit an open-outcry low of US$6.04, its lowest price since May 1. The market should keep trending lower as harvest advances, with September wheat headed to drop below US$6 by the end of the week, Leffler said. Warm, dry weather is favorable for cutting in the Plains this week.

 

"More than anything, harvest pressure is continuing to work on the market," Leffler said.

 

Traders will soon start positioning ahead of major crop reports due out next week, analysts said. The U.S. Department of Agriculture is due to issue estimates on acreage and quarterly grain stocks at 8:30 a.m. EDT (1230 GMT) Tuesday.

 

 

Minneapolis Grain Exchange

 

Early strength in MGE wheat faded amid pressure from the other markets, traders said. The markets are oversold after recent losses, but it is difficult to bounce when winter wheat harvest is pressing on CBOT and KCBT wheat, a trader said. The MGE trades hard red spring wheat.

 

Traders are waiting to see the USDA's weekly export-sales report, due out at 8:30 a.m. EDT Thursday. Demand has been slow lately, traders said. Analysts estimate sales will be 200,000 tonnes to 400,000 tonnes.