November 21, 2008

 

US Wheat Review on Thursday: Falls on bearish outside markets

 

 

U.S. wheat futures settled lower Thursday as the markets continued to take their cue from bearish outside influences.

 

Chicago Board of Trade December wheat fell 15 1/4 cents to US$5.11 3/4 per bushel. Kansas City Board of Trade December wheat lost 11 1/4 cents to US$5.48 1/4, and Minneapolis Grain Exchange December wheat sank 4 1/2 cents to US$6.00.

 

Weakness in crude oil weighed on the grains, as ethanol is made from corn and funds often trade in a basket of commodities. Strength in the U.S. dollar added pressure because it gives foreign countries less buying power to import grains.

 

"With the dollar getting stronger, that's making it tougher" for the U.S. to win export business, says Tom Leffler, owner of Leffler Commodities.

 

The grains have been trading in tandem with outside markets amid concerns about the global economic slowdown. Stocks were weaker Thursday at the end of the grains trading session, although they traded higher for a while during the day. A slide below 8000 in the Dow Jones Industrial Average on Wednesday "kind of took the wind out" of commodities, an analyst said.

 

CBOT December wheat hit a session low of US$5.00 1/2, below its November low of US$5.05 1/4. The contract held above US$5 and its October low of US$4.96 1/2, although it's difficult to find that encouraging, Leffler said.

 

"That puts us right down there in the bottom trading range," Leffler said. "We're so close [to the October lows]. I don't think it makes any difference. I sure can't get friendly. I keep telling people, 'If you have wheat out there to sell, take advantage of rallies.'"

 

 

Kansas City Board of Trade

 

KCBT wheat closed lower on the weak outside markets and firm dollar. KCBT December wheat hit a session low of US$5.37 3/4, above its October high of US$5.31 1/4.

 

Weekly U.S. wheat export sales of 511,000 tonnes for delivery in 2008-09 were up 40% from the prior four-week average and at the high end of trade expectations. The outlook for U.S. wheat export looks rough, as the Black Sea region continues to offer stiff competition for business, analysts said.

 

Egypt's state-owned wheat buyer, the General Authority for Supply Commodities, said Thursday it bought 30,000 metric tonnes of Russian wheat in a tender and none from the U.S. Syria and Jordan also said they bought Russian wheat in separate tenders.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures closed weaker with the other markets amid worries about the health of the global economy. MGE December wheat hit a session low of US$5.85, below its October low of US$5.85 1/2.

 

There was some talk about Argentina's Agriculture Secretariat lowering its forecast for 2008-09 wheat production to 10.1 million tonnes, down from 16 million tonnes last season. It's possible that some export demand could shift to the U.S. from Argentina due to poor production, although that "remains to be seen," an analyst said.

 

"We've been expecting a small crop," an analyst said. "It just isn't getting any better."