US Wheat Review: Retreat on Tuesday; Broad-based weakness, lack of demand

 

 

U.S. wheat futures settled lower Tuesday, succumbing to speculative selling on broad-based commodity weakness and a lack of fresh demand to underpin prices.

 

December CBOT wheat ended 11 1/2 cents lower at US$4.87 1/4, December KCBT wheat settled 10 1/2 cents lower at US$5.10 1/4, and December MGE wheat finished 16 1/4 cents lower at US$5.21 3/4.

 

In CBOT pit trades, speculative fund selling was estimated at 4,000 lots.

 

In the absence of fresh export demand, abundant U.S. and global supplies provide a bearish fundamental scenario to attract selling interest, analysts said. The influence of outside financial markets played a role in the declines as well, with strength in the U.S. dollar, lower crude oil and declining equities generating enough financial fears to keep buyers on the run, analysts said.

 

A quiet news front kept attention on outside market forces, with spillover pressure from corn and soy adding to the defensive tonnee.

 

The market lacks a demand base to support current prices, with futures challenging contract lows on the perfect formula for price weakness, big supplies, slow export demand and weakness in outside financial markets, a CBOT floor analyst said.

 

Ample world supplies continue to serve as an anchor to upside potential, with the harvesting of the U.S. spring wheat crop another bearish feature limiting advances.

 

Meanwhile, spring wheat harvest pressure is adding another twist to the bearish theme, as large crop outlooks are poised to add to already abundant supplies.

 

In demand news, Egypt's state-owned General Authority for Supply Commodities, or GASC, announced after the close Tuesday it was tendering to buy 55,000 to 60,000 metric tonnes of wheat on a free-on-board basis. GASC is looking to buy 55,000-60,000 tonnes of U.S. soft red wheat, U.S. soft white wheat, U.S. hard red wheat, Australian wheat, German wheat, Argentine wheat, Canadian wheat, or French wheat, said Nomani Nomani, the undersecretary of the GASC vice chairman, to Dow Jones Newswires.

 

 

Kansa  City Board of Trade

 

KCBT wheat futures settled lower, grinding out losses in step with broad-based losses across the commodity sector. Futures are set to test contract lows, with perfect weather, big supplies and the need for fresh export demand keeping buyers on the sidelines, analysts said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures fell in unison with the rest of U.S. wheat futures. Harvest pressure is the fundamental key to the market's declines, with weather providing good opportunities for crop cutting. The harvest will allow big crops to add to abundant supply, a spring wheat analyst said. The market is in the midst of a correction versus other wheat markets, eroding premium previously established amid late plantings and slowly developing crops, analysts said.