October 31, 2008


US Wheat Review on Thursday: Falls in sympathy with corn, crude



U.S. wheat futures fell Thursday, pressured by selling interest in corn, sharp losses in key markets such as crude oil and on ideas Wednesdays rally was overdone, brokers and analysts said.


Basis December contracts, Chicago Board of Trade wheat fell 23 1/4 cents to end at US$5.38, Kansas City Board of Trade lost 24 1/2 cents to US$5.37 1/2 and wheat on the Minneapolis Grain Exchange fell 14 1/2 cents to settle at US$6.47 a bushel.


"There are still hurdles to the bull market," said John Kleist, broker/analyst with Allendale, explaining the decline after the market saw limit-up gains Wednesday.


A solid start to the U.S. winter wheat crop and a lack of aggressive export demand will likely keep prices from posting a significant rally, a trader said.


While weekly wheat exports rose 20% from last week, they were considered mostly routine and provided no real price support.


Export sales for the week to Oct. 23 were a net 460,400 metric tonnes for the 2008-09 crop year. Export shipments totaled 590,300 tonnes and were up 14% from the previous week. The primary destinations were Japan with 75,700 tonnes, Iran with 66,400 tonnes and Egypt at 65,500 tonnes, the U.S. Agriculture Department said.


Japan is looking for 96,000 tonnes in a tender to be concluded Friday, with shipments expected to arrive between Dec. 21 and Jan. 31. From the U.S., it seeks 48,000 tonnes of dark northern spring, 13,000 tonnes of western white and 14,000 tonnes of semi-hard wheat. Japan is also looking at buying 21,000 tonnes of western red spring from Canada.


While U.S. wheat prices have tumbled from their August highs, historical values are still relatively high and continue to hinder demand, Kleist explained.


"Five-dollar wheat on a historical basis aint cheap," he said.


Weather conditions on the central and southern Plains are expected to be warm and dry the next five days, which will favor final winter wheat planting efforts and early crop development, private forecaster DTN Meteorlogix said. Showers and cooler temperatures are seen near the middle of next week but are not expected to cause significant concern.


Funds sold an estimated 3,000 wheat contracts.





KCBT December wheat fell on the bearish trade in corn and CBOT wheat enticing traders to sell.


Though the contract posted a 4% loss on the day, it still remained within Wednesdays large range for an inside day on the technical chart. Thursdays range is bound by the 10-day moving average near the bottom and the 20-day near the session top.


However, major psychological support remains intact at US$5, an analyst said.





MGE December wheat fell, though the losses werent as pronounced as Chicago and Kansas City. The contract remained easily within Wednesdays trading range, with immediate resistance found at Wednesdays high of US$6.76 3/4 and support uncovered near Wednesdays US$6.27 low.