October 15, 2008


US Wheat Review on Tuesday: Pressure from other markets fuels late slide



U.S. wheat futures closed near session lows Tuesday after weakness in other markets sparked a late sell-off.


Chicago Board of Trade December wheat fell 15 1/2 cents to close at US$5.73 per bushel, just above its session low of US$5.71. Kansas City Board of Trade December wheat dropped 14 1/4 cents to US$6.13, and Minneapolis Grain Exchange December wheat sank 9 1/4 cents to US$6.53 3/4.


Weakness in the stock market and crude oil weighed on the grains, which continued to watch financial and outside markets for direction, a trader said. Steep losses in CBOT soybeans also were a bearish influence, he said.


The late sell-off came after wheat traded near unchanged for much of the day session. Traders were seen to be taking "a breather" after a rally Monday tied to short-covering and strong gains in the stock market, an analyst said.


The markets need to rebuild some confidence after recent liquidation and volatility, an analyst said. Traders are "very non-committal" at this point, said Jason Britt, president of Central State Commodities.


"A lot of damage has been done" by recent sell-offs, Britt said. "Technically, you've done a lot of damage. You're going to have to walk before you can run."


Weakness in the U.S. dollar and lingering concerns about crop conditions in the Southern Hemisphere were "friendly" factors for wheat, Britt said. A softer dollar gives foreign countries more buying power to import U.S. commodities.



Kansas City Board of Trade


KCBT wheat futures closed lower on pressure from losses in the stock market, crude oil and CBOT soy, a trader said. Wheat continues to keep its eyes glued to the outside markets, with some traders stepping to the sidelines due to high volatility, he said.


The session low for KCBT December wheat was US$6.11.


U.S. winter wheat planting is expected to be about 73% complete in the U.S. Department of Agriculture's weekly crop progress report, due out at 4 p.m. EDT, Citigroup said. Last week, planting was 59% complete, 1 percentage point behind the five-year average.



Minneapolis Grain Exchange


MGE wheat futures closed lower after trading both sides during the day session. The session low for MGE December wheat was US$6.52.


There are ideas that wheat has found economic value at current price levels, an analyst said. The markets don't want to dampen export demand by pushing prices too much higher, he said.


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