November 1, 2008

 

US Wheat Review on Friday: Mixed; pares losses in light trade

 

 

U.S. wheat futures closed mixed, as traders rallied the market late in light volume trade after what had been a down day for prices, traders said Friday.

 

Basis December contracts, Chicago Board of Trade wheat lost 1 3/4 cents to settle at US$5.36 1/4, Kansas City Board of Trade wheat was down just 1/2 cent at US$5.73 and wheat at the Minneapolis Grain Exchange rose 1/2 cent to end the day at US$6.47 1/2 a bushel.

 

Traders cited month-end fund buying, a turnaround in the crude oil market and a rally in equities for the late interest.

 

"It didn't take much volume for it to move higher," said Joe Victor, analyst and vice president of marketing at Allendale Inc.

 

Export demand remains slack, however, as Japan bought 21,000 metric tonnes of Canadian wheat in a tender Friday and none from the U.S., when traders had anticipated around 75,000 tonnes would be purchased from the U.S.

 

"Typically, they're the country ... on a weekly basis that are normally buyers of about 125,000 tonnes," spread among Canada, Australia and the U.S., said Victor. Because of the faltering Japanese economy, their tenders have fallen to about 75,000 tonnes per week.

 

Favorable weather on the Plains as Indian Summer arrives with above-normal temperatures is expected to allow producers to finish planting and contribute to a healthy start for the 2008-09 winter wheat crop, traders said.

 

Ahead of the rally, funds had sold a net 2,000 wheat contracts.

 

The declines for October were steep, with CBOT December wheat losing US$1.43 3/4, or 21.2% a bushel. The losses reflect the bearish sentiment in commodities, as the Dow Jones-AIG Commodity Index fell 21.63% in October.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat followed the lead of the complex and also trimmed losses into the closing bell for just a 1/2 cent loss on the day.

 

A combination of ample world supplies and a solid start to the 2008-09 U.S. winter wheat crop may keep a lid on prices for the time being, a trader said.

 

For October, December HRW lost US$1.39, or 19.5% a bushel.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat edged into positive territory by the closing bell, boosted by a bullish inversion between the December and March futures. This signals that demand is strong and producers are holding onto stocks, said Victor.

 

The overall strength in the market may eventually bleed over into the CBOT and KCBT, he added.

 

The market also lost ground in October, though its losses weren't as severe. December lost 99 1/4 cents, or 13.3%, on the month.