US Wheat Review on Wednesday: CBOT December hits fresh 16-month low
U.S. wheat futures followed equities and crude oil lower Wednesday, with the nearby Chicago Board of Trade December contract hitting a fresh 16-month low.
Chicago Board of Trade December wheat closed down 17 1/4 cents at US$5.55 3/4 per bushel after sliding to a session low of US$5.54. That was the lowest price for a nearby contract on a monthly continuation chart since June 2007.
Kansas City Board of Trade December wheat tumbled 23 cents to US$5.90. Minneapolis Grain Exchange December wheat dropped 15 1/4 cents to US$6.38 1/2.
Traders continued to watch financial and outside markets amid jitters about the credit crisis, an analyst said. Lackluster corporate earnings and fears of a worldwide economic slowdown pushed down U.S. stocks.
U.S. retail sales took the sharpest drop in three years, diving by 1.2% last month, according to the Commerce Department. Economists expected a 0.7% drop in sales during September.
"Those retail-sales numbers came in lower than expected, and it just turned into a negative day all across the board," said Tom Leffler, owner of Leffler Commodities.
Fundamental factors are not important for wheat at the moment, Leffler said. The grains are "paying attention to what's happening in the other markets," he said.
Weakness in CBOT corn and soybeans added pressure on wheat, with nearby December corn closing below the psychologically important level of US$4 for the first time in a year, a trader said. Commodity funds sold an estimated 2,000 wheat contracts at the CBOT.
Kansas City Board of Trade
KCBT wheat futures continued to slide lower on pressure from the outside markets and losses at the CBOT, a trader said. KCBT December wheat traded to the lowest price for a nearby contract since July 2007.
Hard red winter wheat areas in the Plains have been receiving beneficial moisture for planting and early growth, which is fundamentally bearish for the markets, an analyst said. The U.S. Department of Agriculture, in its weekly crop progress report, said U.S. winter wheat planting was 73% complete as of Sunday, on par with the five-year average, and 46% of the crop had emerged, above the average of 44%.
"I don't think that's helping the situation any," an analyst said about the crop's good start, "but I don't think that's why we're down."
Volume was thin, traders said. Market participants remain nervous about volatility and the credit crisis, they said.
Minneapolis Grain Exchange
MGE wheat futures finished lower with the grains, pressured by weakness in outside markets. The stock market needs to calm down before fundamentals resume their role in the market, a trader said.
"The fundamentals of the grain market aren't making any difference," an analyst said.