US Wheat Review on Friday: Sinks on spillover selling, technicals

 

 

U.S. wheat futures closed lower Friday amid broad-based commodity weakness on technical selling and spillover pressure from other markets.

 

Chicago Board of Trade December wheat closed down 25 1/2 cents at US$7.51 1/2 per bushel. Kansas City Board of Trade December wheat dropped 24 cents to US$7.95, and Minneapolis Grain Exchange December wheat sank 26 cents to US$8.15 1/4.

 

Wheat slumped to steep losses, along with CBOT corn, soybeans and crude oil. Fears about prospects of a slowing global economy loomed over the markets, analysts said.

 

Commodity funds continued to liquidate, unloading an estimated 2,000 wheat contracts at the CBOT. CBOT December wheat briefly fell through psychological support at US$7.50 a bushel and hit a session low of US$7.45 1/2, its lowest price since Nov. 29.

 

Weekly U.S. wheat export sales of 436,600 metric tonnes were above trade estimates of 100,000 to 350,000 tonnes. They were up 19% from the previous week, but down 33% from the prior 4-week average. Top buyers included Japan, which took 87,500 tonnes; the Philippines, which bought 70,700 tonnes; and Egypt, which bought 70,000 tonnes, according to the U.S. Department of Agriculture.

 

"We've got pretty decent exports," said Dave Marshall, an independent commodities broker and analyst. "This year's sales to date are still the second best, behind last year, since 1989 through the end of August."

 

However, there are ideas that sales will slow as crops from other parts of the world, such as the European Union and Australia, come online. The U.S. sales may be "front-loaded," a trader said.

 

In other export news, Turkish state grain board TMO purchased 200,000 metric tonnes of milling wheat, 50,000 tonnes of soft red wheat and 50,000 tonnes of durum wheat in a tender, according to the Ihlas News Agency. Some of the milling wheat came from the U.S., and shipments are scheduled between Sept. 15 and Feb. 28, it said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures closed lower amid the broad sell-off of commodities, a trader said. Weakness in crude oil, CBOT soybeans and corn weighed on wheat, he said.

 

Uncertainty persists about the size of Australia's crop. The crop looks better this year after being ravaged for the past two years by drought, but there are still concerns about dryness in areas, particularly in western areas, a trader said.

 

Rainfall of up to two inches, with locally heavier totals, fell through Australia's eastern wheat areas of southern Queensland and northern New South Wales, DTN Meteorlogix said. Late jointing to early reproductive wheat in this area will "greatly benefit" from the rain, the private weather firm said.

 

 

Minneapolis Grain Exchange

 

MGE wheat continued to be a follower of the other markets. Losses overnight set the weaker tonnee for wheat and the row crops, a trader said.

 

There seems to be little movement of spring wheat at this time, a trader said. Harvest was 81% complete as of Sunday. The U.S. Department of Agriculture is slated to issue an update on harvest progress Monday in its weekly crop progress report.