August 7, 2008


US Wheat Review on Wednesday: Ends mostly lower on liquidation pressure



Broad fund liquidation in commodities dragged U.S. wheat futures mostly lower Wednesday, with the markets feeling pressure from losses in Chicago Board of Trade corn and soybeans.


CBOT September wheat fell 14 1/4 cents to US$7.65 3/4 per bushel. Kansas City Board of Trade September wheat dropped 10 1/2 cents to US$7.96, and Minneapolis Grain Exchange September wheat rose 1/2 cent to US$8.53 3/4.


Wheat ended lower with the neighboring row crops and with outside markets like crude oil. Commodity funds sold an estimated 3,000 wheat contracts at the CBOT.


"It's 'running-for-cover' day," said Sid Love, analyst for Kropf & Love Consulting. "We've got a lot of liquidation."


Still, wheat held up relatively well considering the losses in corn and soybeans, an analyst said. Most-active December corn fell 17 1/4 cents to US$5.27 3/4, while November soybeans tumbled 47 cents to US$12.22.


CBOT September wheat traded within Tuesday's range, which spanned from US$7.49 to US$8.04. The contract's range Wednesday was US$7.51 to US$7.90.


"I think, technically, it's acting fairly well," Alan Brugler, president of Brugler Marketing & Management, said of wheat. "I would attribute most of the selling to fund-type liquidation."


Wheat maintained its sideways trading range, as the market gave back gains from Tuesday, a CBOT floor broker said. Short-covering and demand strength helped boost prices Tuesday.


Traders are looking ahead to the release of U.S. Department of Agriculture crop reports to be released next Tuesday. The reports will include updated estimates on U.S. wheat production and carryout, along with production and yield estimates for corn and soybeans.



Kansas City Board of Trade


Weakness at the CBOT spilled over into KCBT wheat futures, a trader said. The market followed CBOT wheat, corn and soybeans amid little fresh fundamental news, he said.


Solid demand is seen providing underlying strength to the markets, an analyst said. Egypt on Tuesday bought the bulk of wheat purchases in a tender from the U.S. and smaller quantities from Russia and Ukraine.


Weekly U.S. wheat export sales for the week ended July 31 are forecast to be 400,000 to 700,000 tonnes. The U.S. Department of Agriculture is slated to release the sales data at 8:30 a.m. EDT Thursday.



Minneapolis Grain Exchange


MGE September wheat ended slightly higher, but deferred contracts were lower. MGE December wheat closed down 4 cents at US$8.66 1/4.


Spreading helped push the nearby September contract slightly higher, a MGE floor trader said. Volume at the MGE was "really, really dead" until some late Japanese buying helped trim losses in the December, he said.


A market-on-close buy order for December wheat was filled around US$8.67, a floor trader said. Locals then "pounded it down," he said.


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