US Wheat Review on Friday: Retreats from gains amid reform jitters

 

 

In a setback from gains earlier this week, U.S. wheat futures fell Friday amid uncertainty about the potential for changes to the Chicago Board of Trade storage rate mechanism, traders said.

 

Chicago Board of Trade December wheat sank 23 1/4 cents to US$4.49 3/4 a bushel, down 7 1/2 cents on the week. Kansas City Board of Trade December wheat dropped 14 1/2 cents to US$4.69 1/4, and Minneapolis Grain Exchange December wheat lost 13 1/2 cents to US$4.86 3/4.

 

The losses were "a give-back of the gains we achieved throughout much of the week," a CBOT floor analyst said. CBOT December wheat was up 15 3/4 cents on the week as of Thursday's close.

 

There was no fresh fundamental reason for wheat to extend the gains into the weekend, traders said. It's well known that world supplies are large and export demand is lagging.

 

"We're just caught in this trading range," said Larry Glenn, a broker and analyst at Frontier Ag. "In wheat's case, it's a pretty wide range."

 

CBOT wheat led the downside as the market is uncertain whether a variable storage rate will be implemented starting with the nearby December 2009 contract. A subcommittee of the Commodity Futures Trading Commission this week recommended the plan as a solution to poor futures-cash convergence.

 

Back-month spreads were widening in reaction to the proposal, the floor analyst said. Anticipation of the change has "mostly been influencing the spread, as opposed to the flat price," he said.

 

 

Kansas City Board of Trade

 

KCBT slid in a turnaround from recent strength amid an absence of supportive news, traders said. The market is waiting for some fresh export demand, they said.

 

"It seems more like the traders pushing it back and forth," Glenn said. "We don't necessarily have a dominating type of export factor or demand factor."

 

KCBT December wheat closed down 2 3/4 cents on the week.

 

 

Minneapolis Grain Exchange

 

Traders continue to track the U.S. spring wheat harvest and are starting to look ahead to the U.S. Department of Agriculture's small grains report, due out Sept. 30, an analyst said. The USDA is expected to raise its estimate for spring wheat production due to reports of strong yields, he said.

 

MGE December wheat finished down 10 cents on the week.