US grains tumble, declines in crude oil set tone
Saturday, 3 November 2007
CHICAGO, Nov 2 (Reuters): US grain prices fell sharply yesterday, with Chicago Board of Trade wheat futures tumbling more than three per cent on disappointing exports and bearish technical signals, traders said.
Spillover pressure from other commodity markets added to the weak sentiment, with US crude oil futures falling on profit- taking after vaulting to a record high above $96 per barrel.
CBOT soybean and corn futures, which have been tracking the crude oil market closely, fell nearly two per cent. Like crude, soybeans retreated after setting contract highs overnight.
"For the last week or several days, the grains have been under the influence of the outside markets, crude oil and the dollar in particular. We think those 'macro' factors will retain strong influence for the time being," said Iowa Grain analyst Gavin Maguire in Chicago.
Corn and soy prices have grown more closely tied to the energy markets, due in part to expansion in the biofuels sector.
Selling in wheat futures accelerated as the spot CBOT December contract WZ7 dropped below technical support at $8 per bushel and last week's low of $7.90-1/4.
The contract eventually plunged its daily limit of 30 cents to hit $7.78, a two-month low, and settled at $7.78-1/4, down 29- 3/4 cents.
One catalyst for the sell-off in wheat was the US Department of Agriculture's weekly export sales report, which put US wheat sales at 180,200 tonnes.
The weekly total marked a low for the 2007/08 marketing year, and was far below trade estimates for 650,000 to 750,000 tonnes.
"We think US wheat exports are going to have a tough time finding sustained buying interest. Freight rates are making other regions more competitive," Maguire said.
The poor sales marked a shift from recent months, which saw US wheat selling at a torrid pace following crop shortfalls in parts of Europe and Australia.
US wheat exports thus far in the marketing year begun June 1 are up to 26.6 million tonnes, nearly double the pace of last year and close to USDA's forecast for the entire year of 31.3 million tonnes.
After the CBOT closed, Egypt's main wheat buying agency said it was seeking 55,000 to 60,000 tonnes of wheat.
Results of the tender were expected on Friday morning, Chicago time, and the quantity and origin of any purchases could influence CBOT market direction.
Spillover pressure from other commodity markets added to the weak sentiment, with US crude oil futures falling on profit- taking after vaulting to a record high above $96 per barrel.
CBOT soybean and corn futures, which have been tracking the crude oil market closely, fell nearly two per cent. Like crude, soybeans retreated after setting contract highs overnight.
"For the last week or several days, the grains have been under the influence of the outside markets, crude oil and the dollar in particular. We think those 'macro' factors will retain strong influence for the time being," said Iowa Grain analyst Gavin Maguire in Chicago.
Corn and soy prices have grown more closely tied to the energy markets, due in part to expansion in the biofuels sector.
Selling in wheat futures accelerated as the spot CBOT December contract WZ7 dropped below technical support at $8 per bushel and last week's low of $7.90-1/4.
The contract eventually plunged its daily limit of 30 cents to hit $7.78, a two-month low, and settled at $7.78-1/4, down 29- 3/4 cents.
One catalyst for the sell-off in wheat was the US Department of Agriculture's weekly export sales report, which put US wheat sales at 180,200 tonnes.
The weekly total marked a low for the 2007/08 marketing year, and was far below trade estimates for 650,000 to 750,000 tonnes.
"We think US wheat exports are going to have a tough time finding sustained buying interest. Freight rates are making other regions more competitive," Maguire said.
The poor sales marked a shift from recent months, which saw US wheat selling at a torrid pace following crop shortfalls in parts of Europe and Australia.
US wheat exports thus far in the marketing year begun June 1 are up to 26.6 million tonnes, nearly double the pace of last year and close to USDA's forecast for the entire year of 31.3 million tonnes.
After the CBOT closed, Egypt's main wheat buying agency said it was seeking 55,000 to 60,000 tonnes of wheat.
Results of the tender were expected on Friday morning, Chicago time, and the quantity and origin of any purchases could influence CBOT market direction.