October 2, 2009

U.S. wheat futures backpedaled Thursday from Wednesday's gains as bearish fundamentals reasserted pressure on the markets, analysts said.

 

Chicago Board of Trade December wheat closed down 4 3/4 cents at US$4.52 3/4 a bushel. Kansas City Board of Trade December wheat sank seven cents to US$4.69 1/2, and Minneapolis Grain Exchange December wheat shed four cents to US$4.87 3/4.

 

Wheat fell back after rising Wednesday on month-end and quarter-end positioning, analysts said. The markets didn't have fundamental support for the rally, they said.

 

The U.S. Department of Agriculture on Wednesday raised its forecast for U.S. wheat output from August and pegged U.S quarterly wheat stocks above trade expectations. Global supplies also are considered large.

 

"I think they're kind of refocusing back on that," said Larry Glenn, broker and analyst for Frontier Ag. "We've just got a lot of wheat out there."

 

In other news, it was seen as "negative" that Deutsche Bank AG said it is restructuring its giant commodity-tracking funds amid a crackdown by U.S. regulators on holdings of individual commodities, traders said. Positions of wheat, corn and sugar futures in the PowerShares DB Agriculture Fund will be halved to satisfy Commodity Futures Trading Commission position limits.

 

The news was "not anything bullish," said Brian Hoops, president of Midwest Market Solution. "It's another reason to be lower in prices."

 

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

              

Kansas City Board of Trade

 

A stronger dollar and weaker corn, soybeans and crude oil weighed on wheat, traders said. A firm dollar is seen as bearish because it makes U.S. grains less attractive to foreign buyers.

 

Total weekly U.S. wheat export sales of 426,700 tonnes were within estimates of 350,000 to 550,000 tonnes. Net sales of 538,200 tonnes for delivery in 2009-10 were up 6% from the previous week and 13% from the prior four-week average, according to the USDA.

 

"Our export business is just routine," Hoops said.

          

Minneapolis Grain Exchange

 

Traders are waiting for Statistics Canada to issue updated production estimates Friday. Pre-report estimates for all-wheat production range from 25 million to 27 million tonnes, compared to Statistics Canada's August estimate of 23.614 million.

 

Harvest of spring wheat in the U.S. northern Plains is wrapping up. The USDA on Wednesday raised its production forecast for spring wheat other than durum from August.

 

"We've got a big crop we just harvested," an analyst said.