US Wheat Review on Thursday: Drops on weak demand, spillover pressure

 

 

Weak fundamentals and spillover pressure from other markets pushed U.S. wheat futures lower Thursday in a setback from Wednesday's gains.

 

Chicago Board of Trade December wheat ended down 8 3/4 cents at US$5.12 1/4 a bushel. Kansas City Board of Trade December wheat fell 9 1/4 cents to US$5.17 1/2, and Minneapolis Grain Exchange December wheat sagged 7 1/4 cents to US$5.28 1/2.

 

The losses were a setback from a late rally Wednesday that was underpinned by fund buying and spreading, an analyst said. Wheat's fundamentals are not supportive, as world supplies are large and export demand is lackluster, he said.

 

Egypt's General Authority for Supply Commodities, or GASC, bought French and Russian wheat in a tender and snubbed the U.S. Egypt, a major buyer on the world market, is known for being price-sensitive.

 

Losses in CBOT corn and soy added pressure to wheat, traders said. Warmer and drier weather in the central U.S. looks favorable for the corn and soy harvests and for soft red winter wheat planting, they said. Planting and combining have been delayed by rain.

 

"Sunny, dry, and increasingly warm weather occurs through this weekend," private weather firm T-Storm Weather said in an update to its daily forecast. "Drying, harvesting, and planting rates improve."

 

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

 

 

Kansas City Board of Trade

 

KCBT wheat pulled back amid pressure from weakness in the CBOT row crops and outside markets, a trader said. It wasn't surprising that Egypt snubbed the U.S. in its tender, but the absence of supportive demand news was bearish for the market, traders said.

 

U.S. wheat is uncompetitive on the world export market because it is too pricey, a trader said. Weekly U.S. wheat export sales of 284,500 tonnes were below trade expectations of 300,000 tonnes to 500,000 tonnes.

 

 

Minneapolis Grain Exchange

 

MGE wheat finished weaker due to the lack of fundamental support and spillover support, traders said. Traders are starting to look ahead to U.S. Department of Agriculture reports due out Tuesday that are expected to project large corn and soy crops and large wheat ending stocks.

 

The average of analysts' estimates for 2009-10 U.S. wheat carryout is 869 million bushels, up slightly from the USDA's October estimate of 864 million, according to a Dow Jones Newswires survey of 16 analysts. In 2008-09, carryout was 657 million bushels.