US Wheat Review on Wednesday: Closes lower in setback from rallies

 

 

U.S. wheat futures closed lower Wednesday in a retreat from recent gains as investment funds pushed pause on their recent buying spree.

 

Chicago Board of Trade December wheat slipped 8 1/2 cents to US$5.66 1/4 a bushel. Kansas City Board of Trade December wheat fell 8 3/4 cents to US$5.65 1/4, and Minneapolis Grain Exchange December wheat lost 11 3/4 cents to US$5.70 1/4.

 

Traders booked profits after prices climbed sharply earlier this week and month, analysts said. Despite the setback, CBOT December wheat was still up 72 cents for the month as of Wednesday's close.

 

Commodity funds sold an estimated 4,000 contracts at the CBOT. Buying by investment and speculative funds have been pushing prices higher lately, analysts said.

 

The markets were technically overbought after the gains and lacked fundamental support, they said. Global ending stocks are considered large, and export demand has been lackluster.

 

Egypt's state-owned General Authority for Supply Commodities said after the close that it was tendering to buy 55,000 to 60,000 tonnenes of wheat for shipment Jan. 1-15. The U.S. is not expected to be competitive for the business because prices are too high, traders said.

 

Egypt, a major buyer on the world wheat market, is known for being price sensitive. It often tenders for 55,000 to 60,000 tonnenes and then buys more.

 

Prior to the close, the markets traded both sides and hit fresh highs for the recent move. CBOT December wheat in electronic trading touched US$5.83 1/2, the highest price for a nearby contract on a monthly continuation chart since June.

 

 

Kansas City Board of Trade

 

KCBT wheat finished lower in choppy activity and gave back a small portion of its recent gains. KCBT December wheat was up 66 1/4 cents for the month as of Wednesday's close.

 

The market backpedaled after fund buying and supportive outside markets boosted prices in earlier dealings, a trader said. Traders will continue to watch for fund money to move the market, he said.

 

"It's this ball of confusion when you try to really narrow down your focus and figure out how high can prices go, how long can this last," AgriVisor analyst Dale Durchholz said about the recent trend of investment fund buying. "It's really hard to get your arms around."

 

 

Minneapolis Grain Exchange

 

MGE wheat led the downside after trailing CBOT wheat in recent rallies. Funds are more likely to put their money into CBOT wheat because it has more liquidity and open interest than the MGE, an analyst said.

 

MGE December wheat as of Wednesday's close was up 57 1/2 cents on the month.

 

Traders on Thursday will look at weekly U.S. wheat export sales data, due out at 8:30 a.m. EST. Analysts expect sales for the week ended Nov. 12 to be 300,000 to 500,000 tonnenes.