US Wheat Review on Wednesday: Extends losses on large world supply

 

 

U.S. wheat futures extended losses Wednesday as large global supplies and lackluster export demand weighed on prices, analysts said.

 

Chicago Board of Trade December wheat slipped 2 3/4 cents to US$4.56 1/4 a bushel. Kansas City Board of Trade December wheat fell 5 1/2 cents to US$4.72 1/2, and Minneapolis Grain Exchange December wheat fell 1 3/4 cents to US$4.86 1/2.

 

CBOT wheat traded both sides before sticking in negative territory. The December contract in overnight trading set a fresh contract low of US$4.52 3/4, below Tuesday's low of US$4.57, but did not take out that low during the day session.

 

Bearishness about comfortable global supplies continued to hang over the markets, said Jason Britt, president of Central State Commodities. There is "a lot of wheat out there," he said.

 

"It's just hard to find anything from a bull's perspective to really sink your teeth into," Britt said.

 

Export demand has been lackluster so far this marketing year amid competition for business from other countries. Some analysts expect the U.S. Department of Agriculture to raise its estimate for 2009-10 U.S. wheat carryout in the September supply/demand report due to the slow pace of sales.

 

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

 

 

Kansas City Board of Trade

 

KCBT wheat led the downside amid a lack of supportive news, a trader said. Neighboring CBOT corn and soy were mixed and did not offer strong spillover support, he said.

 

There was some disappointment wheat did not feel more strength Wednesday from weakness in the U.S. dollar, Britt said. A soft dollar is generally seen as supportive because it makes U.S. wheat more attractive to foreign buyers.

 

USDA supply/demand and production data due out at 8:30 a.m. EDT Friday will be more important for corn and soy than for wheat, traders said. The government may wait to make major changes to wheat estimates until it issues its small grains report Sept. 30, an analyst said.

 

 

Minneapolis Grain Exchange

 

MGE wheat closed mixed, with the nearby September contract closing 2 1/2 cents up at its session high of US$4.74. Deferred months slipped.

 

Statistics Canada issued an estimate for all-wheat stocks of 6.556 million tonnes, which topped trade expectations of 6 million to 6.3 million. Wheat producers in North Dakota, meanwhile, are reporting "strong yields" so far, the North Dakota Wheat Commission said.

 

The U.S. hard red spring wheat crop was 58% harvested as of Sunday, up 20 percentage points from the previous week but still well behind the average of 88%, according to the USDA's weekly crop progress report. Producers continue to advance harvest but at a much slower pace than normal due to slow maturity and shorter harvest days, according to the North Dakota Wheat Commission. Development of the crop was delayed because it was planted late in the spring.