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Wheat falls on demand concerns

10/12/2012 @ 3:27pm

U.S. wheat futures settled lower Friday on concerns about weak export demand for U.S. wheat and government forecasts for greater world supplies than analysts had expected.

Chicago Board of Trade December wheat futures fell 29 1/4 cents, or 3.3%, to $8.56 3/4 a bushel. KCBT December wheat fell 27 3/4 cents, or 3.0%, to $8.90 1/4 a bushel. MGEX December wheat fell 22 1/2 cents, or 2.4%, to $9.24 1/4 a bushel.

Wheat futures fell as traders worried that U.S. exports of the grain remain too expensive to be competitive and that a slow recent pace of exports could lead to higher domestic stockpiles.

Weekly export sales for wheat reported Friday morning fell below analysts' expectations, underlining the worries about poor demand. The USDA reported net wheat export sales in the week through Oct. 4 were 279,900 metric tons. Analysts had expected net sales of 300,000 to 500,000 tons.

"Export sales to date are still way behind where they should be" to keep up with government forecasts for this crop year, said Dan Manternach, senior economist with agriculture-advisory firm Doane Advisory Services in St. Louis.

Wheat also fell on supply forecasts made by the government a day earlier. On Thursday, higher corn prices led wheat futures to rise, even though the U.S. Department of Agriculture cut its forecasts for domestic and world wheat supplies by less than analysts had predicted. Corn and wheat prices often move together since both grains are used in animal feed.

But traders on Friday had a delayed reaction to the USDA forecasts for wheat, Mr. Manternach said. "The wheat numbers by themselves were neutral at best," he said.

The USDA on Thursday reduced its projection for domestic wheat inventories next May 31, the end of the current marketing year, by 6.3% to 654 million bushels. Analysts had expected a forecast of 627 million bushels.

Many analysts also said the USDA's cut to its wheat production forecast for Australia didn't go far enough to account fully for dry weather there. And the agency's forecast for world ending stocks of wheat didn't fall as much as some analysts had predicted.

Wheat, along with corn and soybean futures, also fell on profit-taking, as prices jumped Thursday and traders looked to book gains and exit positions before a weekend.

Corn also was pressured by weak export sales. The USDA Friday reported net corn export sales in the week through Oct. 4 were 14,200 metric tons. Analysts had expected 300,000 to 425,000 tons.

Soybeans also were pressured by the possibility of large new soybean crops in Argentina and Brazil. Traders are watching closely the weather in South America as new soy crops are planted there.

CBOT December corn fell 20 1/2 cents, or 2.7%, to $7.52 3/4 a bushel. November soybeans fell 26 cents, or 1.7%, to $15.22 1/2 a bushel.

Write to Owen Fletcher at owen.fletcher@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

October 12, 2012 16:05 ET (20:05 GMT)

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