US Wheat Review on Friday: Markets tumble, hit new contract lows

 

 

U.S. wheat futures hit new contract lows Friday as a firm dollar, falling corn futures and bearishness about hefty world supplies pressured prices.

 

Chicago Board of Trade September wheat ended down 10 3/4 cents at US$4.89 1/2 per bushel, down 38 3/4 cents on the week. Kansas City Board of Trade September wheat closed down 8 3/4 cents at US$5.25 1/4, and Minneapolis Grain Exchange September wheat lost 6 cents to US$5.73 1/4.

 

CBOT September wheat set a new contract low of US$4.88 a bushel, below its pervious open outcry low of US$4.99, set Thursday. Commodity funds sold an estimated 5,000 contracts.

 

Strength in the U.S. dollar "certainly kind of poisoned the atmosphere for finding a reason to rally the grains," said Dave Marshall, an independent marketing adviser and commodities broker. A firm dollar makes U.S. wheat less competitive for export business on the world market.

 

Lackluster export demand continued to hang over the market as the demand front was quiet, traders said. Egypt passed over the U.S. on Thursday in a tender and bought wheat from France and Russia.

 

"The perception is just that there's plenty of wheat around," Marshall said.

 

The markets will likely consolidate early next week ahead of U.S. Department of Agriculture crop reports due at 8:30 a.m. EDT Wednesday. The reports will include fresh estimates on U.S. wheat production and world supply and demand.

 

 

Kansas City Board of Trade

 

KCBT September wheat closed down 34 cents on the week. The contract in open outcry trading set a new contract low of US$5.23, below its previous low of US$5.30 1/2, set Dec. 5.

 

Friday's sell-off marked wheat's fourth lower close in a row. The sell-offs, which began Tuesday, followed a string of gains during the previous three days.

 

"The spike that we saw earlier this week just could not hold," a broker said. "In general, the wheat exports continue to be a pretty tough thing to find a home for."

 

 

Minneapolis Grain Exchange

 

MGE September wheat closed down 31 3/4 cents on the week. Prices briefly traded higher during the day session before succumbing to pressure from neighboring and outside markets.

 

The USDA's estimate for 2009 U.S. spring wheat production will probably be the focus of Wednesday's reports for wheat traders, an analyst said. The crop is still developing in the northern U.S. Plains, and harvest will be delayed because it was planted later than usual. Market participants generally expect the USDA to raise its production estimate from July.

 

"Everybody's viewed this spring wheat crop as generally in pretty good shape," an analyst said.