July 18, 2008


US Wheat Review on Wednesday: Slides on spillover, rising production



U.S. wheat futures closed lower Thursday on spillover pressure from weakness in other markets and on forecasts for increasing world production.


Chicago Board of Trade September wheat fell 24 1/2 cents to US$8.09 1/2 per bushel. Kansas City Board of Trade September wheat dropped 22 cents to US$8.38 1/2, and Minneapolis Grain Exchange September wheat lost 14 cents to US$8.80.


Wheat was swept up in a widespread liquidation of commodities, an analyst said. Losses in CBOT corn and soybeans and in crude oil weighed on wheat.


Wheat has been seen as a follower lately, particularly of corn, traders said. The grains are linked because both are used for animal feed.


"With the wheat, it really needs support out from other markets," said Dale Durchholz, analyst for AgriVisor. "The outside markets are part and parcel to everything going on, with crude imploding."


It was seen as bearish that analytical report Strategie Grains raised its 2008-09 European Union soft wheat production forecast to 131.7 million tonnes, up 2.7 million tonnes from the June projection. Industry members expect the world to produce its biggest crop in history in 2008-09.


"From a fundamental standpoint, it would appear like a big world crop is getting bigger," said Dave Marshall, an independent marketing advisor and commodities broker. "It's kind of hard for wheat to pick itself up off the floor having corn and beans so weak, too."


Commodity funds sold an estimated 3,000 contracts at the CBOT.



Kansas City Board of Trade


KCBT wheat futures closed lower on spillover pressure from weakness in CBOT corn and in crude oil, a trader said. The market was pulling back after rising Wednesday on technical buying, he said.


Weekly U.S. wheat export sales of 748,600 metric tonnes were above trade estimates, which ranged from 400,000 to 650,000 tonnes. Of the total, 347,600 tonnes were hard red winter wheat, traded at the KCBT.


The market could find some direction Friday from the results of an Egyptian tender for 55,000 to 60,000 tonnes of wheat, traders said. The wheat is for shipment Aug. 16-31.



Minneapolis Grain Exchange


MGE wheat futures followed CBOT wheat and corn into negative territory. The spring wheat crop is looking better after some rains through the Dakotas this week, a trader said.


In U.S. northern Plains spring wheat areas, an active jet stream continues to produce episodes of thunderstorms, especially for central and east areas, DTN Meteorlogix said. Wheat-growing conditions are mostly favorable, except possibly in the central Montana region where it continues to trend drier, the private weather firm said.


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