November 18, 2008


US Wheat Review on Monday: Stumbles on speculative sales, fundamentals



U.S. wheat futures stumbled Monday, succumbing to speculative selling on bearish underlying fundamentals and a lack of leadership from outside market influences.


March CBOT wheat ended 20 1/2 cents lower at US$5.54, March KCBT wheat settled 27 1/2 cents lower at US$5.80, and March MGE wheat finished 28 cents lower at US$6.25 1/4.


The market's weak underlying fundamentals served as the catalyst to pressure prices, with key influences being record global supplies and a good start to the the U.S. winter wheat crop, analysts said.


Spreading versus corn and soybeans added to the defensive tonnee, with the absence of bullish fundamental news in the face of mixed signals from outside markets leading to the defensive posture, analysts added.


Supportive technical chart formations were seen limiting downside pressure, but a global economic slowdown and the U.S. needing to be price competitive in the face of abundant world supplies helped push prices lower, traders said.


Meanwhile, the DTN Meteorlogix Weather Service forecast said there continues to be no major weather problems in the U.S. southern Plains wheat areas. Soil moisture and temperatures favor pre-winter growth of wheat.


U.S. wheat inspected for export in the week ended Nov. 13 totaled 14.273 million bushels. Analysts surveyed by Dow Jones Newswires anticipated inspections in a range of 10 million to 19 million bushels. The inspections represented a 9.6% increase from the previous week. Accumulated inspections in the 2008-09 marketing year total 566.161 million bushels, a 15.1% decrease from the inspections at the same time last year.


In CBOT pit trades, speculative fund selling was estimated at 3,000 lots.



Kansas City Board Of Trade


KCBT wheat was down on a lack of buyers, as underlying support quickly dissipated on any sign of fund selling, a KCBT floor trader said. There was nothing fundamental or technical that drove the day's action, but MF Global was a buyer of March contracts.



Minneapolis Grain Exchange


Spread trade was the most active feature in MGE wheat, a MGE trader said. The December/March spread moved from a 4 1/2-cent inverse to a 9-cent carry, before settling at 5 cents carry. Light intermarket spread was seen early in the session, with MGE wheat initially trading at a premium to Chicago and Kansas City. However, once the MGE spread collapsed, MGE lagged behind the other markets for the rest of the day, an MGE floor analyst said.


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