November 2, 2007

 

US Wheat Review on Thursday: CBOT December falls to 2-month low

 

 

U.S. wheat futures ended sharply lower Thursday after nearby contracts temporarily hit limit down on technical selling and a lack of buyers, traders said.

 

Chicago Board of Trade December wheat fell 29 3/4 cents to US$7.78 1/4 per bushel, the contract's lowest close since Aug. 31. CBOT December wheat touched limit down, 30 cents lower, during the session.

 

Kansas City Board of Trade December wheat closed down 27 1/2 cents at US$8.04 1/2 after briefly trading limit down, while Minneapolis Grain Exchange December wheat settled 28 cents lower at US$8.06.

 

Technical selling yanked CBOT December wheat lower after the contract traded below US$8 per bushel, a CBOT floor trader said. The slide triggered sell stops, and there was not much buying around to support the market, he said.

 

Commodity funds sold an estimated 4,000 contracts.

 

Weakness in outside markets, particularly crude oil, added to the bearish tonnee, an analyst said. Neighboring CBOT corn and soybean markets ended lower, as well.

 

Weekly U.S. export sales of 180,200 metric tonnes were a marketing-year low and seen as a disappointment. The sales were 67% below the previous week and 82% below the prior four-week average, the USDA said.

 

There are fears demand is drying up after the U.S. saw strong sales early in the marketing year. It looks as though countries covered their wheat needs with purchases earlier in the year, a CBOT floor trader said.

 

However, the day's losses were thought to be linked more directly to technical liquidation and the lack of buyers than to the weak export demand because prices rose for a time shortly after the opening, traders said. Market activity continues to be volatile, they said.

 

"The export sales added fuel to the fire," an analyst said.

 

There was also some early support from a report that Tunisia bought 100,000 tonnes of optional origin wheat in a tender, a trader said. Pakistan was reported to be a planning a tender 400,000 tonnes of wheat.

 

In Argentina, some drier weather is developing, but soil moisture is adequate for crops, DTN Meteorlogix said. Some cooler temperatures will move into Argentina wheat areas Saturday, but are not expected to reach critically cold levels for developing plants, the weather firm said.

 

Widespread rain or thunderstorms are in store through eastern Australia's crop areas in the near term, followed by several cool and damp days, Meteorlogix said. Rain in the east is unfavorable for maturing wheat and may delay wheat harvest, the firm said.

 

 

Kansas City Board of Trade

 

KCBT December wheat touched limit down during the day session and closed at its lowest price since Sept. 6. CBOT wheat futures hit limit down first, and KCBT followed, a floor trader said.

 

The Meteorlogix forecast calls for no significant rainfall through Saturday in the Plains. The trend will allow winter wheat planting to wrap up for the season, the firm said.

 

However, concerns are growing about soil moisture supplies in the southwest Plains, Meteorlogix said. Soil moisture in western Kansas is notably less than a year ago at this time.

 

Low soil moisture, along with lower-quality seed being planted because of low supplies this fall, may threaten stand development ahead of dormancy, Meteorlogix said.

 

It has been puzzling that the dryness has not supported new-crop KCBT wheat futures, an analyst said.

 

"The dry areas of southern Plains are getting more critical," he said.

 

 

Minneapolis Grain Exchange

 

MGE December wheat closed at its lowest price since Sept. 20. Trading was choppy, and it seemed as though the market was following the CBOT, a MGE floor trader said.

 

There are bearish concerns that countries may cancel wheat purchases secured earlier in the year, the MGE trader said.