US Wheat Review on Monday: Nearby contracts close at fresh 2008 lows

 

 

U.S. wheat futures closed at their lowest prices of the year on Monday amid broad-based liquidation of commodities, including limit-down losses in Chicago Board of Trade corn and soybeans.

 

CBOT September wheat fell 35 1/4 cents to US$7.58 3/4 per bushel after touching a session low of US$7.53. The contract May 29 traded as low as US$7.47 during the day session before trimming losses to close at the previous low close of US$7.59 1/4.

 

Kansas City Board of Trade September wheat shed 26 1/4 cents to US$7.96 after hitting a session low of US$7.93 1/2, a new 2008 low. Minneapolis Grain Exchange September wheat dropped 32 cents to US$8.42 after slipping to a session low of US$8.36, a new low for the year.

 

Spillover selling from CBOT corn and soybeans pressured wheat, as commodity funds sold an estimated 4,000 wheat contracts at the CBOT, traders said. Crude oil and metals were weaker, along with the grains.

 

"I could not find a commodity that was up today," an analyst said.

 

Wheat did not fall by its daily, exchange-imposed limit, as corn and soybeans did, amid underlying support from the strong pace of export business, an analyst said. Importing countries are thought to be rebuilding their wheat ending stocks after supplies dwindled last marketing year, traders said.

 

Buyers in the week ended July 24 included Egypt, which took 180,100 tonnes of soft red winter wheat, and Iran, which bought 125,000 tonnes of hard red winter wheat, according to the U.S. Department of Agriculture's latest weekly export sales report. Total U.S. wheat export sales for the week were 726,400 tonnes, above trade estimates.

 

"The fact that you had Egypt and Pakistan and Iran coming in last week and picking up wheat, I think the market mindset was if those three are coming in and taking care of their needs, then the downside in wheat is limited," said Mike Zuzolo, analyst for Risk Management Commodities.

 

 

Kansas City Board of Trade

 

KCBT September wheat set a new low for the year of US$7.93 1/2, taking out its May 29 low of US$7.95 1/2, before trimming losses. The previous low close was US$8.02 1/2 on June 3.

 

Weakness in CBOT corn, soybeans and crude oil pressured prices, a trader said. Expectations for a record world crop also continue to hang over the market, he said.

 

The U.S. winter wheat harvest is expected to be 85%-86% complete in the USDA's weekly crop progress report, compared to 79% a week ago. The report is due out at 4 p.m. EDT on Monday.

 

 

Minneapolis Grain Exchange

 

The previous low close for MGE September wheat was US$8.50 on June 4. MGE wheat futures dropped along with the other markets.

 

The U.S. spring wheat harvest is expected to be 9%-10% complete in the USDA's weekly crop progress report, traders and analysts said. Dry weather across the U.S. northern Plains has helped encourage cutting, said Terry Reilly, analyst for Citigroup.

 

A week ago, 1% of the spring wheat crop was harvested, behind the average of 6%. Good-to-excellent ratings for spring wheat are seen dropping 1-3 percentage points from 60% last week, analysts said.