May 10, 2012

CBOT wheat lower as buyers shun risky assets

Chicago Board of Trade soft red winter wheat futures reduced 2.7% on Wednesday (May 9), with the benchmark contract closing below US$6 per bushel, a first since January, due to a selloff in risky assets such as wheat prompted by a firmer dollar.  

Traders also noted a round of position squaring ahead of the US Agriculture Department's first estimate of the 2012/13 US winter wheat crop on Thursday morning, said Reuters.        

The dollar hit its highest level against the euro since January on Wednesday morning amid worries about political turmoil in Greece and Spain's banking sector. A firm dollar lowers demand for US commodities.         

Hard red winter wheat futures at the Kansas City Board of Trade also fell but MGEX spring wheat was mixed. 

Traders said MGEX wheat was supported by a round of short covering following the market's 6.4% decline so far this month.  

USDA report expected to forecast 2012/13 US winter wheat production at 1.639 billion bushels, up nearly 10% from a year earlier due to near-perfect growing conditions in key production areas of the US Plains.  

Farm office FranceAgriMer raised its forecast of French 2011/12 soft wheat ending stocks to 2.36 million tonnes from 2.1 million tonnes due to lowered exports.    

Lebanese government bought 50,000 tonnes of milling wheat from countries in the Black Sea region for prices between US$281.90 and US$298.14 a tonne c&f, European traders said.