September 3, 2008


US Wheat Review on Tuesday: CBOT hits 9-month low on spillover, technicals



U.S. wheat futures tumbled Tuesday on pressure from other markets, strength in the U.S. dollar and technical selling, with Chicago Board of Trade December wheat hitting a nine-month low.


CBOT December wheat fell 34 1/2 cents to US$7.66 3/4 per bushel. Kansas City Board of Trade December wheat dropped 28 1/4 cents to US$8.11 1/4, and Minneapolis Grain Exchange December wheat tumbled 29 1/2 cents to US$8.40 1/4.


Wheat slumped amid a broad-based liquidation in commodities that included the neighboring CBOT corn and soybean markets. Weak crude oil and the strong greenback sparked the sell-off in commodities, traders said.


Funds were selling, including an estimated 3,000 CBOT wheat contracts. There was little fresh fundamental news to support the market.


"The funds are sellers, and that's all there is to it," an analyst said.


CBOT December wheat during the day session sunk to a low of US$7.57 before trimming losses. That is a new low for 2008, taking out the May 29 low of US$7.68, and its lowest price since Nov. 30.


The move below the 2008 low produced "serious technical damage and does suggest still more downside price pressure to come," a technical analyst said. Wheat bears "have fresh, solid technical momentum on their side," he said.


Projections for a record global wheat crop continue to hang over the wheat markets, traders said. Farmers worldwide expanded plantings last year to take advantage of high prices, and weather has been mostly favorable.



Kansas City Board of Trade


KCBT December wheat hit a session low of US$8.01, its lowest price since Dec. 6. The steep drop in crude oil and metals weighed on the market, along with losses in CBOT corn and soybeans, a trader said.


After the close of trading, Egypt's state-owned General Authority for Supply Commodities said it will tender Wednesday to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment Oct. 1-15 on a free-on-board basis. Traders will look for the results of the tender for direction Wednesday, although the markets will be under technical pressure, an analyst said.


Minneapolis Grain Exchange


MGE December wheat hit a session low of US$8.30, its lowest price since Dec. 19. MGE wheat followed the other markets into negative territory amid a lack of fresh fundamental news, a trader said.


The U.S. Department of Agriculture's weekly crop progress report was expected to estimate the U.S. spring wheat harvest is about 75% to 77% complete, traders said. The report, due out at 4 p.m. EDT., was delayed one day due to the Labor Day holiday. A week earlier, harvest was 61% complete, down from the average of 72%.


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