US Wheat Review on Tuesday: Poor demand pushes prices to 1-month lows
U.S. wheat futures closed at their lowest prices in more than a month Tuesday on slow export demand and a lack of support from other markets.
Chicago Board of Trade March wheat finished down 8 1/4 cents at US$5.39 3/4 per bushel. Kansas City Board of Trade March wheat lost 4 cents to US$5.33, and Minneapolis Grain Exchange March wheat fell 6 cents to US$5.48 1/4. It was the lowest close for each contract since Nov. 6.
The markets dropped amid continued bearishness over abundant world supplies and stiff competition for export business, analysts said. Prices have been pulling back after fund and technical buying last week pushed CBOT March wheat to nearly US$6. Prices are too high for U.S. wheat to be competitive for export business on the world market, traders said.
"Soft demand trends are going to overtake anything else, because you just don't have good fund buying," said Brian Hoops, president of Midwest Market Solutions.
The next level of technical support for CBOT March wheat is seen at US$5.30 to US$5.35, a CBOT trader said. The contract finished just above its 50-day moving average around US$5.37, its session low.
Wheat did not have strong spillover support from other markets, as CBOT soy were weaker and corn was near unchanged. There was intermarket spreading, with traders buying corn and selling wheat, a CBOT trader said.
Commodity funds sold an estimated 2,000 CBOT wheat contracts.
Kansas City Board of Trade
Strength in the U.S. dollar was seen as a bearish influence, as it makes U.S. wheat less attractive to foreign buyers, a trader said. Losses in gold and crude oil added to the weaker tonnee, he said.
Minneapolis Grain Exchange
Traders are starting to look ahead to the U.S. Department of Agriculture's December supply/demand report, due out at 8:30 a.m. EST Thursday. The USDA is expected to cut its forecast for Australia's wheat crop from last month and raise its estimate for Canada's crop.
