US Wheat Review on Tuesday: Settle down; bearish fundamentals weigh

 

 

U.S. wheat futures ended lower Tuesday, succumbing to selling pressure attributed to bearish underlying market fundamentals.

 

March CBOT wheat ended 6 3/4 cents lower at $5.36 3/4, March KCBT wheat settled 7 1/2 cents lower at $5.26 1/2, and March MGE wheat finished 10 1/2 cents lower at $5.37 1/4.

 

In CBOT trades, speculative fund selling was estimated at 3,000 lots.

 

Without a speculative push, wheat does not have the fundamentals to justify lofty price levels, said Chad Henderson, analyst with Prime Ag Consultants.

 

U.S. wheat prices are not competitive in the world market, leaving futures searching for a price level that will encourage demand. The combination of big supplies and slow export demand are bearish influences on prices, Henderson said.

 

The market will struggle in the absence of outside support, and even with reduced acres in 2010, an average crop yield will leave the market with yet another big carryout burden, he added. In addition, world wheat stocks are projected at their highest level in nearly a decade.

 

Overall activity was subdued, with futures seemingly settling into a holiday mode. Technical selling was featured, with the market struggling to find support after spillover support from soy dried up down the stretch and active CBOT contracts dipped below support at their 40-day and 50-day moving averages.

 

 

Kansa City Board of Trade

 

KCBT wheat futures stumbled in quiet trade, backpedaling in the absence of fresh fundamental news. The trade is settling into a holiday mode, with buyers unwilling to push prices as the market is not seeing a continuation of recent speculative buying, a KCBT trader said. The market garnered mild support from soy for most of the day, but as that market stumbled late, wheat extended its losses.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures ended lower in step with the rest of the U.S. wheat complex. The spring wheat market was the laggard of the rest of the wheat complex, struggling in the absence of speculative interest in the market, a MGE broker said. "Country hedging was very thin, as the 40-cent break in prices from a couple of weeks ago has pushed farmers to the sidelines," he added. The combination of burdensome supplies and U.S. prices not competitive with Australian, Canada or Black Sea wheat kept futures on the defensive.