October 3, 2009

 

US Wheat Review on Friday: New contract lows on big supply, spillover

 

 

Bearishness about large world supplies and spillover pressure from neighboring markets knocked U.S. wheat futures to fresh contract lows Friday.

 

Chicago Board of Trade December wheat closed down 11 1/2 cents at US$4.41 1/4 a bushel, down 8 1/2 cents on the week. Kansas City Board of Trade December wheat fell 10 cents to US$4.59 1/2, down 9 3/4 cents on the week. Minneapolis Grain Exchange December wheat lost 9 3/4 cents at US$4.78, down 8 3/4 cents on the week.

 

CBOT December wheat in electronic trading hit a new contract low of US$4.39 1/4, below the previous low of US$4.39 1/2, set Wednesday. Wheat has repeatedly hit new contract lows during the past 1 1/2 months amid pressure from comfortable world stocks and lackluster export demand.

 

"Somewhere here we're going to get low enough where the market's going to bounce," said Tom Leffler, owner of Leffler Commodities. "At the moment, that just has not happened."

 

Non-commercial speculative funds continue to hold a large net short position in CBOT wheat. That could eventually lead to a short-covering rally, Leffler said.

 

"That could probably be a bounce more than anything in the marketplace right now," he said. "I don't see anything else out there that's friendly."

 

Commodity funds sold an estimated 3,000 contracts at the CBOT.

 

 

KCBT December wheat in electronic trading hit a fresh contract low of US$4.58 1/2, below its previous low of US$4.60.

 

Weakness in CBOT corn and soybeans created a bearish tone for wheat, traders said. December corn closed down 7 cents, while November soybeans tumbled 33 cents.

 

Traders are following the progress of winter wheat seeding amid ideas that plantings will drop due to weak prices. However, acreage is unknown at this point because the crop is still going in the ground, Leffler said.

 

 

MGE December wheat hit a session low of US$4.77 1/4. The contract low of US$4.77 was set Wednesday.

 

Statistics Canada raised its estimate for all-wheat production to 24.58 million metric tonnes from its September estimate of 23.614 million. An increase was expected, but the estimate came in below pre-report trade estimates, which ranged from 25 million to 27 million bushels. Production last year was 28.611 million.