Australia's January wheat futures fall on US lead

Australia's most active wheat futures contract - ASX January - lost ground Tuesday (December 2) following a negative lead from the US, where Chicago Board of Trade March wheat Monday lost 33.25 cents to settle at US$5.28 a bushel.

At 0710 GMT, ASX January wheat was quoted at A$277.30 a tonne, down A$5.70 from Monday's settlement.

The fall in ASX January wheat certainly reflects the short-term impact of a weaker US market, but prices are likely being supported by a tight milling wheat market in New South Wales, where ASX wheat contracts are deliverable, said Tom Galbraith, an adviser at Independent Commodity Management at Moree town.

"There's s a fair reluctance from the grower to be selling at these sorts of prices," said Galbraith.

If farmers have harvested and binned or stored milling wheat, then they're likely holding onto it and not offering it for sale, given the milling wheat market is tightening with considerable quantities being downgraded to feed grade following wet weather at harvest, he said.

"The lack of grower selling is supporting ASX," he said, noting that the move for CBOT March was larger than the ASX January move.