US Wheat Review on Friday: Sinks on dollar rally, spillover selling
Spillover pressure from other markets and gains in the U.S. dollar knocked U.S. wheat futures deep into negative territory Friday.
Chicago Board of Trade September wheat fell 57 cents to US$7.65 1/4 a bushel. Kansas City Board of Trade September wheat dropped 43 cents to US$8.03 3/4, and Minneapolis Grain Exchange September wheat shed 45 1/2 cents to US$8.58.
Tumbling CBOT corn and soybeans and weakness in outside markets weighed on wheat, traders said. A strong greenback is seen as bearish for the grains because it gives foreign importers less buying power.
Commodity funds sold an estimated 4,000 wheat contracts at the CBOT.
"The U.S. dollar was smoking," a broker said. "Beans and corn got hit."
CBOT September wheat ended down 28 3/4 cents on the week. Still, the contract is well above where it was trading a year ago, when the price was US$6.67.
Wheat has some underlying support from solid export demand, a trader said. Egypt bought wheat from the U.S. this week, and Iran has been a buyer in the two most recent weekly export sales reports.
"World demand has been fairly active," the broker said.
The daily trading limit for CBOT wheat will revert to 60 cents Monday after expanding to 90 cents Friday. The limit was temporarily widened after CBOT September and December wheat Thursday rose the 60-cent limit at the close, even though the contracts did not settle limit up Thursday.
Kansas City Board of Trade
KCBT wheat futures sank under pressure from neighboring and outside markets, a floor trader said. The strength in the U.S. dollar and sell-off in crude oil set the bearish tonnee, he said.
Next week, the trade will focus on U.S. Department of Agriculture crop data due out at 8:30 a.m. EDT Tuesday, traders said. However, no major fireworks are expected for wheat from the August crop reports, with analysts forecasting minor shifts in wheat production estimates.
The average of analysts' estimates for 2008-09 U.S. all wheat production was 2.459 billion bushels, down from the USDA's July estimate of 2.461 billion, according to a Dow Jones Newswires survey of 14 analysts. The average of analysts' estimates for 2008-09 wheat ending stocks was 525 million bushels, down from the USDA's July estimate of 537 million bushels.
Minneapolis Grain Exchange
MGE wheat futures were a follower on CBOT wheat, the row crops and the energies, a trader said.
In spring wheat areas of the U.S. northern Plains wheat areas, periods of hot and dry weather will offer favorable conditions for spring wheat harvest progress, DTN Meteorlogix said. Scattered showers and thunderstorms early next week may cause some disruptions, the private weather firm said.