US Wheat Review on Thursday: Mostly down on weak corn, fundamentals

 

 

U.S. wheat futures finished mostly lower Thursday on spillover pressure from weakness in neighboring Chicago Board of Trade corn and a lack of supportive news, traders said.

 

CBOT December wheat closed down 5 1/2 cents at US$4.61 3/4 a bushel. Kansas City Board of Trade December wheat lost 5 3/4 cents to US$4.74 1/4, and Minneapolis Grain Exchange, or MGEX, December wheat rose 3/4 cent to US$5.00 1/2.

 

Wheat has been taking direction from CBOT corn and soy recently amid a lack of fresh fundamental news of its own, analysts said. Large world supplies and lackluster export demand are fundamentally bearish for wheat, they said.

 

"We're just playing tag-along here more than anything," said Greg Wagner, analyst for AgResource Co. "There doesn't seem to be any apparent heavy spreading going on."

 

Weekly U.S. wheat export sales of 449,400 tonnes were within trade expectations of 350,000 tonnes to 550,000 tonnes. Sales were down 19% from the previous week and 9% from the prior four-week average, according to the U.S. Department of Agriculture.

 

There was "nothing big" as far as sales this week, with Mexico coming in as the largest buyer at 59,600 tonnes, a broker said. Traders have been waiting for a pickup in export demand, but there is strong competition for business.

 

Commodity funds sold an estimated 2,000 wheat contracts at the CBOT.

 

 

Kansas City Board Of Trade

 

KCBT wheat watched activity in CBOT corn and soy, traders said. Corn finished lower, while soy ended mixed in choppy two-sided trade.

 

"Wheat's just strictly a follower of the fall crops," said Larry Glenn, broker and analyst at Frontier Ag. "We can't drum up enough of our own news."

 

Brazil said a shipment of U.S. wheat was being tested for vomitoxin, a fungal byproduct that can sicken humans and animals if ingested. Vomitoxin is caused by the fungal disease Fusarium head blight, also known as head scab.

 

Infections of scab in the most recent crop of U.S. soft red winter wheat, traded at the CBOT, led to reduced test weights and high levels of vomitoxin. Brazil usually buys hard red winter wheat from the U.S., traded at the KCBT, but it wasn't immediately clear what variety of wheat was being tested.

 

 

Minneapolis Grain Exchange

 

MGEX wheat seemed to find underlying support from an easing of pressure from the U.S. spring wheat harvest, Wagner said. The pressure is fading as traders sense they have a good handle on the size of the crop, he said.

 

In other news, private analytical firm Informa Economics surprised some traders by estimating 2009-10 U.S. wheat production at 2.154 billion bushels, below the USDA's latest estimate of 2.184 billion. There are some expectations for output to rise due to strong hard red spring wheat yields.