US Wheat Review on Thursday: Sinks on economic woes, outside pressure
Chicago Board of Trade December wheat tumbled 33 3/4 cents to US$6.36 a bushel. Kansas City Board of Trade December wheat sank 35 1/4 cents to US$6.68 3/4, and Minneapolis Grain Exchange December wheat tumbled 34 1/2 cents to US$7.04.
A "continued crunch" on liquidity prompted traders to pare back their risks and get out of the markets, said Jason Britt, broker and analyst for Central State Commodities. Commodity funds liquidated across the grains, unloading an estimated 2,000 wheat contracts at the CBOT.
Strength in the U.S. dollar and weakness in crude oil weighed on wheat, traders said. A firm dollar makes grains more expensive to foreign buyers.
Technical selling added pressure, with CBOT December wheat slicing through a support level at US$6.50, a trader said. The contract's next downside target is around US$5.90, said Louise Gartner, analyst for Spectrum Commodities.
"I would think the market would at least catch its breath" at that level, she said.
Fundamentals took a backseat to the outside influences, traders said. Britt told clients he was "wasting my breath telling you about fundamentals."
Kansas City Board of Trade
Strength in the U.S. dollar and weakness in crude oil pushed KCBT wheat sharply lower, a broker said. The market is susceptible to more weakness following the "pretty bad close," he said.
Wheat could find some support if the dollar backs off a bit on Friday, an analyst said. Short-covering also could help boost prices, he said.
KCBT wheat fell even though U.S. weekly wheat export sales for delivery in 2008-09 were 651,900 tonnes, above trade estimates of 300,000 to 500,000 tonnes. Buyers continue to favor higher quality varieties, taking 405,600 tonnes of hard red winter wheat for 2008-09 delivery.
Minneapolis Grain Exchange
MGE wheat futures felt pressure from an increase in Statistics Canada's wheat production estimate, a floor trader said. It was seen as particularly bearish after the USDA this week raised its spring wheat production forecast by 46 million bushels from August, he said.
"We had such a big crop report here from USDA," a MGE trader said. "Then Canada comes out and says their crop is bigger. There's nothing to support us."
