US Wheat Review on Tuesday: Closes down on technicals but off lows
Technical selling on Tuesday knocked U.S. wheat futures to fresh lows for the year, but the markets trimmed losses ahead of the close.
Chicago Board of Trade December wheat ended down 13 1/4 cents at US$7.30 1/2 per bushel. Kansas City Board of Trade December wheat closed down 12 3/4 cents at US$7.72, and Minneapolis Grain Exchange December wheat settled 7 3/4 cents lower at US$7.99 1/4.
Bears have the technical advantage in wheat, with the markets still in a downtrend after a spike Aug. 21, an analyst said. The markets are in an oversold condition and could find some technical support moving forward, he said.
CBOT December wheat hit a session low of US$7.19, its lowest price since Nov. 27, before trimming losses. Commodity funds sold an estimated 2,000 contracts.
Wheat will find direction ahead of the U.S. Department of Agriculture's September supply and demand report from activity in CBOT corn and soybeans, said Jerry Gidel, analyst for North American Risk Management Services. The report, due out at 8:30 a.m. EDT Friday, will include fresh estimates on 2008-09 U.S. wheat ending stocks and world production.
However, U.S. corn and soybean production data will attract more attention due to uncertainties about the size of the crops, Gidel said. Soybeans rallied late in Tuesday's day session amid technical buying and fears about the potential for a damaging frost in the Midwest, an analyst said. November soybeans closed up 9 cents at US$12.01, well above its session low of US$11.60.
Kansas City Board of Trade
KCBT December wheat hit a session low of US$7.62, its lowest price since Nov. 28, before recovering a bit. Technical selling and spillover pressure from weak crude oil weighed on the market, a KCBT floor trader said.
Moisture in the Great Plains is beneficial for hard red winter wheat planting and added pressure to KCBT wheat, Gidel said. Rain in Australia favors jointing and reproductive wheat, although little or no rain is expected over the next seven days in dry areas of Argentina, DTN Meteorlogix said.
The market should find direction Wednesday from the results of an Egyptian tender, traders said. Egypt's state-owned General Authority for Supply Commodities will tender to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment Oct. 11-20 on a free-on-board basis, an official said.
Minneapolis Grain Exchange
MGE December wheat slipped to a session low of US$7.89, its lowest price since Dec. 3 before trimming losses. It was the contract's first close below US$8 since Dec. 3.
Traders are waiting to see Statistics Canada's all-wheat ending stocks estimates as of July 31, due out Wednesday. Analysts are expecting stocks of 3.9 million to 4.2 million tonnes, compared to 6.8 million as of July 31, 2007.