US Wheat Review on Friday: CBOT futures erase much of early slide

 

 

Wheat futures on the Chicago Board of Trade finished an abbreviated session Friday mostly lower, recovering most of an early tumble as the dollar weakened and fears eased over a potential Dubai debt default.

 

CBOT December wheat fell 1 1/2 cents to US$5.48 3/4 a bushel, after dropping overnight to a two-week low of US$5.30 1/2. The December contract declined 2% on the week. CBOT March wheat fell 1 3/4 cents to US$5.69 3/4.

 

CBOT markets closed an hour early at 1 p.m. EST.

 

Other wheat markets were mixed. Kansas City Board of Trade December wheat fell 3 3/4 cents to US$5.42 3/4 a bushel, while Minneapolis Grain Exchange December wheat gained 2 cents to US$5.53 3/4.

 

As U.S. stocks rebounded from the initial Dubai concerns, the corn and soymeal pits led a short-covering bounce across the CBOT floor, traders said. Earlier, global stock markets sold off on news late Wednesday that Dubai World asked creditors for a six-month stay on repayment of its US$60 billion in debts.

 

"The financial markets kind of quieted down, we took some of the emotion out and [grain futures] came back," said Larry Glenn, a broker and analyst with Frontier Ag Inc. in Quinter, Kan. "The rebound in corn helped wheat some."

 

The dollar's prolonged weakness continued to underpin CBOT futures, Glenn said, and likely will continue to influence grain markets next week. A weak dollar makes U.S. grains cheaper for foreign buyers.

 

Late Friday morning, the euro traded at US$1.4959 after falling to US$1.4827 in the wake of the Dubai news. The euro on Wednesday rose above US$1.51, a high for the year.

 

CBOT December wheat is still down 24% from a high this year of US$7.25 1/4 a bushel, reached June 1, amid burdensome supplies and sluggish exports.

 

U.S. wheat export commitments for the 2009-10 marketing year, which began June 1, totaled 14.4 million metric tonnes through the week ended Nov. 19, the U.S. Department of Agriculture said Friday. That's down 29% from 20.4 million tonnes during the same period in 2008-09.

 

Additionally, heavy deliveries are expected against the CBOT December contract beginning next week, Glenn said. Monday is first notice day for December contracts, meaning notices of intent to deliver actual commodities against futures-market positions can be posted.

 

Weak basis levels and large registrations in CBOT-approved warehouses signal heavy deliveries against December wheat, analysts said. Traders estimated wheat deliveries at 1,500 to 3,000 contracts.

 

Speculative funds sold an estimated 2,000 wheat contracts Friday, CBOT floor sources said.