October 21, 2008


US Wheat Review on Monday: Losses stemmed by neighboring, outside gains



U.S. wheat futures finished Monday's trade with modest losses, tempering greater losses with support from gains logged by neighboring pits, crude oil and the equities indexes, traders and analysts said.


Chicago Board of Trade December wheat contracts shed 2 3/4 cents to close at US$5.63 1/2 per bushel. Kansas City Board of Trade December wheat dipped 1 3/4 cents at US$5.95 3/4, while the Minneapolis Grain Exchange's December contract gained 2 1/2 cents at US$6.42 3/4.


Weekly grain inspections announced Monday by the U.S. Department of Agriculture underwhelmed analysts.


Actual inspections totaled around 16 million bushels; analysts expected to see 21-26 million bushels.


"I think we'll wallow around until credit loosens and we can pick up some exports," said Oklahoma State University agricultural economist Kim Anderson.


Speculative funds sold 1,000 CBOT wheat contracts Monday.


"We're still in a liquidation market with money cut from funds and indexes, but outside markets are giving us a bit of a backbone," a CBOT floor trader said. "It seems the worst of the bailout is behind us, now the trade will start to think about what the [presidential] election means for agricultural markets."



Kansas City Board of Trade


Hard red winter wheat should be in bottoming out territory, said Oklahoma State University agricultural economist Kim Anderson.


"We have to bottom or you won't get the production you need," he said.


Global wheat stock are returning to average or above-average levels, but one bad crop event could return the markets to tight-stock panic exhibited earlier this year, he said.


The USDA will issue an update on winter wheat planting in its weekly crop progress report, due out at 4 p.m. EDT Monday.


"We've had plenty of good weather," Anderson said. "I don't think they'll have any problems getting the crop in."



Minneapolis Grain Exchange


The MGE experienced the same muted activity the rest of the wheat markets shared Monday.


But the exchange managed limited gains on its nearby contract as traders "cranked an inverse spread between the December and March contracts," an MGE-based trader says.


The March contract closed even with the nearby contract at US$6.42 3/4, losing 3/4 cent per bushel.


Otherwise, the trader said,"we're really doing nothing. It's very quiet."