US Wheat Review on Thursday: Settles lower on bearish supply story

 

 

U.S. wheat futures fell Thursday on bearishness about ample world supplies, giving back Wednesday's modest gains.

 

Chicago Board of Trade September wheat closed down 8 3/4 cents at US$4.81 1/2. Kansas City Board of Trade September wheat lost 10 1/2 cents to US$5.08 1/2, Minneapolis Grain Exchange September wheat fell 12 1/2 cents to US$5.50 1/2.

 

The markets felt a hangover from the U.S. Department of Agriculture's August crop reports, issued Wednesday, which raised estimates for world wheat production and ending stocks, analysts said. Weakness in neighboring CBOT corn and soybeans contributed to the bearish tonnee, a trader said.

 

"There's simply no shortage of wheat in the world right at the moment," said Greg Wagner, senior commodity analyst for AgResource Co.

 

Weekly U.S. wheat export sales were within trade expectations, but the markets want to see stronger demand, an analyst said. With ample supplies in the world, U.S. wheat needs to stay price competitive to compete for export business, he said.

 

"We have to attract a little bit more export business...to get a little more dynamic market here," Wagner said. "The export demand is simply a function of price."

 

Wheat fell despite weakness in the U.S. dollar and strength in crude oil, which are normally seen as supportive to the grains. A soft dollar makes U.S. grains more attractive to foreign buyers.

 

 

Kansas City Board of Trade

 

KCBT wheat closed in negative territory on supply pressure, traders said. The markets turned lower early, despite gains overnight and early strength in CBOT corn.

 

CBOT and KCBT wheat retreated Thursday after closing higher Wednesday following the USDA's confirmation that production and ending stocks were expanding. The government estimates didn't change wheat's fundamental storyline, as traders had expected to see larger crop and carryover estimates, an analyst said.

 

The markets are in a time frame where "any sharp break will bounce back and any sharp rally will retreat," the analyst said. "There's really no dynamic fresh information to pry out of the markets after the report yesterday," he said.

 

 

Minneapolis Grain Exchange

 

MGE wheat led the downside for the second consecutive day. The market continued to feel pressure from the USDA's larger-than-expected estimate for U.S. spring wheat production, a trader said.

 

MGE wheat is expected to continue to lose ground against CBOT and KCBT wheat unless stronger demand develops for high-quality wheat, an analyst said. The MGE trades hard red spring wheat, which is known for its high protein content and used to make bread.