October 31, 2009

US Wheat Review on Friday: Falls on improving harvest, seeding prospects

Wheat futures tumbled Friday on an improving harvesting and seeding outlook for the U.S. Midwest and Plains, with Chicago prices sinking to the lowest levels in almost three weeks.

December soft red winter wheat futures on the Chicago Board of Trade fell 9 1/2 cents to US$4.94 1/4 a bushel, the lowest closing price since Oct. 12.

In Kansas City, December hard red winter wheat fell 9 cents to US$4.99, and December hard red spring wheat in Minneapolis fell 10 1/2 cents to US$5.41 1/4.

The first half of November is expected to bring drier weather after heavy rains across much of the central U.S. this month hampered fieldwork.

Drier conditions will allow farmers to accelerate harvest in spring wheat areas and speed planting in winter wheat regions, said Sterling Smith, a market analyst with Country Hedging in St. Paul, Minn.

"We're looking at pretty clear sailing the next 10 days," he said. "We've got a big crop coming in and good harvest weather."

Weakness in oil prices and the stock market, as well as strength in the U.S. dollar, weighed on wheat prices, Smith said. A stronger dollar makes U.S. products more expensive to foreign buyers, potentially crimping exports.

"A firmer dollar definitely kept any rallies at bay," he said, adding that he sees potential for further wheat price declines next week. "If the dollar can stabilize or move higher these markets are going to be under pressure.

"Wheat is a follower with "no redeeming bullish feature" of its own, said John Kleist, broker/analyst with Allendale, Inc. "The wheat's a groupie. It's in the van with the rock stars, which is corn."