US Wheat Review on Monday: Closes at four-week lows on weak demand

 

 

Technical selling and bearishness about sluggish export demand pushed U.S. wheat futures to close at four-week lows Monday, with analysts projecting more downside potential.

 

Chicago Board of Trade March wheat finished down 10 cents at US$5.48 a bushel, its lowest close since Nov. 10. Kansas City Board of Trade March wheat lost 12 cents to US$5.37, and Minneapolis Grain Exchange, or MGEX, March wheat fell 8 3/4 cents to US$5.54 1/4.

 

The markets extended last week's losses after a poor close Friday and amid a lack of bullish fundamental news, analysts said. Commodity funds sold an estimated 3,000 contracts at CBOT. CBOT March wheat is down 40 3/4 cents on the month so far.

 

CBOT March wheat closed below its 40-day moving average around US$5.51, and its next level of support is around the 50-day moving average at US$5.36, an analyst said. PFGBest said in a note, issued Friday, that a close below US$5.52 indicated support was closer to US$5.20.

 

Wheat temporarily trimmed losses during the session, with some spillover support seen from a rally in neighboring CBOT corn and weakness in the U.S. dollar, traders said. However, the market sagged lower again ahead of the close. A weak U.S. dollar is often seen as supportive for the grains because it makes them more attractive to foreign buyers. Losses in gold and crude oil added outside pressure to the grains, a trader said.

 

 

Kansas City Board of Trade

 

KCBT March wheat finished at its lowest price since Nov. 6. The contract is down 38 cents for the month so far.

 

Wheat prices need to drop to make U.S. wheat competitive for export business on the world market, traders said. There is a lot of wheat to go around in the world due to strong production, and importers have shown they are not in a hurry to buy.

 

Weekly U.S. wheat export inspections of 12.982 million bushels, released Monday, were unimpressive compared to estimates of 13 million to 18 million, traders said.

 

 

Minneapolis Grain Exchange

 

MGEX March wheat finished at its lowest price since Nov. 6. The contract is down 33 1/2 cents on the month so far.

 

Traders are starting to look ahead to the U.S. Department of Agriculture's December supply and demand report, due out at 8:30 a.m. EST Thursday. The government is expected to raise its estimate for Canada's wheat crop after Statistics Canada last week pegged production at 26.5 million tonnes. The USDA in November put Canada's crop at 24 million.