US Wheat Review on Wednesday: Down amid bearish weather, lack of demand

 

 

U.S. wheat futures drifted lower Wednesday, succumbing to selling pressure amid bearish harvest weather, a lack of underpinning export demand and the absence of outside market support.

 

December CBOT wheat ended 2 1/4 cents lower at US$4.85 3/4, December KCBT wheat settled 3 1/4 cents lower at US$5.07, and December MGE wheat finished 5 1/2 cents lower at US$5.16 1/4.

 

In CBOT pit trades, speculative fund selling was estimated at 2,000 lots.

 

The market is in the process of trying to establish demand value on its trek below the US$5.00 per bushel level basis CBOT futures, said John Kleist, broker/analyst with Allendale Inc.

 

When there is ample U.S. and world wheat supply, price is determined by demand, and in the absence of strong demand for U.S. wheat, the market is attempting to grind down to levels that will make the U.S. competitive in the global market place, Kleist said.

 

Spring wheat harvest pressure, large deliveries against the spot September CBOT contract and technical chart pressure are additional features helping keep prices on the defensive.

 

However, there are signs of a light at the end of the tunnel, with futures not establishing new contracts lows in CBOT wheat in recent sessions and demand slowly creeping into the market place, Kleist said.

 

There is nothing overtly bullish in the wheat market, but without new lows there seems to be some commercial pricing emerging to offset technical selling, Kleist said. Nevertheless, it all boils down to demand, and exports will be needed to launch any sustainable upward push in the absence of outside financial market support, he added.

 

Egypt's state-owned wheat buyer, the General Authority for Supply Commodities, or GASC, said Wednesday it bought 330,000 metric tonnes of U.S. SRW, French Wheat and Russian wheat on a free-on-board basis. Of the total, GASC bought 90,000 tonnes of Russian wheat, 180,000 tonnes of French wheat, and 60,000 tonnes of U.S. soft red winter wheat.

 

The DTN Meteorlogix weather forecast said the Northern Plains continues to be warm to hot, with temperatures ranging from several degrees above normal in South Dakota and central Nebraska to about 15 degrees Fahrenheit above normal at the Montana/Canada border and northward into the Prairie. Those conditions are favorable for spring wheat harvest and any corn or soy in the area, Meteorlogix added.

 

On tap for Thursday, the U.S. Department of Agriculture weekly export sales report is scheduled to be released at 8:30 a.m. EDT, and analysts surveyed by Dow Jones Newswires estimate wheat sales for the week ended Aug. 27 in a range of 350,000 to 550,000 metric tonnes.

 

 

Kansa  City Board of Trade

 

KCBT wheat futures ended lower, in step with the rest of the complex as the market continues to struggle in the absence of fresh export demand.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures stumbled lower, with active contracts setting new lows. Large supplies, harvest pressure and sluggish export demand combined to weigh on prices, analysts said. The market also continued its correction versus other wheat markets, eroding premium previously established amid late plantings and slowly developing crops, analysts said.