US Wheat Review on Thursday: Ends weaker, hits fresh contract Lows

 

 

Disappointment about export demand and technical pressure drove U.S. wheat futures to fresh contract lows Thursday.

 

Chicago Board of Trade December wheat finished down 7 cents at US$4.78 3/4 a bushel. Kansas City Board of Trade December wheat lost 7 3/4 cents to US$4.99 1/4, and Minneapolis Grain Exchange December wheat sank 10 1/2 cents to US$5.05 3/4.

 

CBOT December wheat set a new contract low of US$4.75 1/4, below its previous low of US$4.80 3/4. The markets are in an oversold condition and due for a bounce after recent losses but lacking fundamental support, an analyst said.

 

Weekly U.S. wheat export sales of 406,100 tonnes were toward the low end of estimates, which ranged from 350,000 to 550,000 tonnes. Of the total sales, sales of soft red winter wheat, traded at the CBOT, were "solid" at 195,200 tonnes, a trader said.

 

Strength in the U.S. dollar added pressure to wheat as it makes U.S. grain less attractive to foreign buyers, a trader said. The market felt spillover pressure from falling CBOT soy and corn, he said.

 

Commodity funds sold an estimated 2,000 wheat contracts at the CBOT.

Kansas City Board of Trade

 

KCBT wheat slipped amid a lack of fundamental support and on pressure from other markets, a trader said. Losses in soy pressured the grains, he said.

 

The pace of export demand needs to accelerate to support the market, an analyst said. The U.S. on Wednesday received the smallest share of business in an Egyptian tender, with France and Russia making bigger sales.

 

"We're just not price competitive," an analyst said. "Traders were told that again this week after Egypt bought a token purchase."

Minneapolis Grain Exchange

 

MGE wheat led the downside. The December contract closed at a 6 1/2 cent premium to KCBT December wheat.

 

Warm weather in the northern U.S. Plains during the next two weeks is adding spring wheat bushels, which should push MGE wheat to a discount to KCBT wheat, according to a note from MF Global. At the beginning of August, MGE December wheat had a premium of about 45 cents to KCBT December wheat.