US Wheat Review on Monday: Drops on failed bailout, plunging crude oil

 

 

U.S. wheat futures - along with neighboring markets, crude oil and the nation's major stock indexes - suffered continued losses Monday as the U.S. House of Representatives fail to succor Wall Street's woes.

 

Chicago Board of Trade December dropped 48 cents to US$6.68 a bushel. Kansas City Board of Trade December wheat sank 40 3/4 cents to US$7.05, and Minneapolis Grain Exchange December wheat lost 43 cents to US$7.46 3/4. All three markets closed near the day's trading lows.

 

Crude oil's losses topped US$9, which added pressure to the sell-off, traders said.

 

Investors remained fixated on the House's rejection of a US$700 billion bill to free the financial industry from an ocean of bad debt.

 

As credit lines continue to tighten, speculative investors continued to exit positions in grain futures during Monday's trade.

 

"The fundamentals are out the window," said Dan Basse, president of AgResource Co. of Monday's wheat trade. "It's all about credit lines and index and hedge funds getting out, and crude oil."

 

While CBOT wheat suffered its greatest daily loss in more than a month, it showed more resilience than corn and soybeans, which both touched the exchange-imposed maximum daily trading drop.

 

Speculative funds sold 2,000 CBOT wheat contracts Monday, compared to sales of 5,000 contracts in corn and 3,000 in soybeans.

 

"Fundamentals in terms of supply and demand are taking a back seat to the money slushing around," said Alan Brugler, president of Brugler Marketing and Management.

 

The forced liquidation of futures positions was "the really big factor" in Monday's trade, he said.

 

 

Kansas City Board of Trade

 

The hard red winter wheat trade fixated on the House vote, a KCBT floor trader said.

 

"We were hoping it would pass," he said. "We moved lower based on lower outside markets."

 

Winter wheat planting progress is estimated to be 30% complete for the week ended Sunday when the USDA releases its weekly crop progress report at 4 p.m. EDT, said analyst Terry Reilly of Citi's Futures Perspective. This compares to 39% last year and the 50% five-year average.

 

 

Minneapolis Grain Exchange

 

The trade in Minneapolis was "relatively slow" and "held in pretty tough until the last 10 minutes when a sell-off took over," an MGE floor trader said.

 

The USDA at 8:30 a.m. EDT on Tuesday is scheduled to issue its quarterly grain stocks and small grains reports, but traders and analysts say that doubt they will contain any news capable of counteracting outside market pressure.