December 10, 2008


US Wheat Review on Tuesday: Slips late on outside pressure



Falling outside markets and strength in the U.S. dollar pressured U.S. wheat futures late in Tuesday's day session.


Chicago Board of Trade March wheat slipped 1 cent to US$4.89 1/2 per bushel. Kansas City Board of Trade March wheat shed 2 cents to US$5.15, and Minneapolis Grain Exchange March wheat edged up 1/4 cent to US$5.68 1/2.


A slide in crude oil and equities weighed on the wheat markets, traders said. The grains have been looking to the outside markets for direction lately amid concerns about the global economic slowdown.


Strength in the U.S. dollar was seen as another bearish influence late in the session, as a firm dollar makes U.S. grains less attractive to foreign buyers. Weakness in the dollar was supportive earlier in the day, an analyst said.


Wheat was firmer for most of the session in a technical bounce, as the markets tried to extend Monday's recovery from a "bloodbath" last week, a CBOT trader said. CBOT March wheat Friday closed down 85 3/4 cents on the week.


Volume was light Tuesday, with the markets seen to be in holiday mode, a CBOT trader said. It is supportive that speculative funds hold a large net short position in CBOT wheat, a trader said.


The U.S. Department of Agriculture is slated to issue its December supply and demand report at 8:30 a.m. EST Thursday. The report isn't expected to spark major fireworks in the wheat markets.


The average of analysts' estimates for 2008-09 U.S. wheat carryout is 596 million bushels, down slightly from the USDA's November estimate of 603 million, according to a Dow Jones Newswires survey of 13 analysts. The range of analysts' pre-report estimates was 575 million to 606 million, with six analysts predicting the USDA will leave its November estimate unchanged.



Kansas City Board of Trade


KCBT wheat futures closed "down on weakness in outside markets," a floor trader said. Trading was "pretty slow," he said.


"We just kind of had a small range," the trader said. "The trend is lower, still."


KCBT March wheat traded in a range of US$5.15 to US$5.26. It closed at its session low.


There was no major market reaction to a new production estimate from the Australian Bureau of Agricultural & Resource Economics, or Abare, a trader said. Abare pegged Australia's crop at 20 million tonnes, barely changed from its early November estimate of 19.9 million tonnes.



Minneapolis Grain Exchange


MGE wheat closed mixed. The March contract finished slightly higher after trading higher for most of the day session.


MGE December wheat closed up 12 3/4 cents at US$5.86 1/2. There is not much volume in the contract ahead of expiration Friday, a trader said.


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