CBOT wheat limit-down

Wheat futures on the Chicago Board of Trade plunged the daily limit of 30 cents per bushel Tuesday after a drop in the US dollar failed to generate fresh wheat export demand, analysts said. Also bearish was a lack of confirmation that Russia would impose steep new tariffs on wheat exports of 30 to 50 percent, well above a planned 10 percent tariff set for mid-November.
Rumours of the Russian tax had lifted Chicago Board of Trade wheat futures late Monday. "Wheat has a problem if it isn't given a daily dose of bullish news, or if it isn't seeing some export news," ADM Investor Services analyst Steve Freed said.
"All three commodities (wheat, corn and soybeans) might be seeing a back-off of export demand. If you slow down part of the engine that got us to these high prices, you're going to see some liquidation," Freed said.
CBOT December wheat settled down the 30-cent limit at $8.41 per bushel. The contract traded synthetically through wheat options at $8.39 at the close, indicating a lower open when electronic trade resumed on Tuesday night.
Funds sold about 4,000 contracts, traders said. Volume was estimated by the CBOT at 78,323 wheat futures and 18,026 options. The tariff rumours followed a period of heavy Russian wheat exports. SovEcon, a Moscow-based independent research organisation, on Tuesday estimated Russia's wheat exports in October at a record high 2.2 million to 2.4 million tonnes.
SovEcon also raised its 2007 wheat production forecast to 47.0 million to 48.25 million tonnes, from the previous 45.5 million to 47.0 million, citing a larger-than-expected crop in Siberia.
CBOT wheat was also pressured by talk of US flour mills taking in Canadian soft wheat. Front-month contracts were hit hardest, losing ground on spreads to new-crop contracts for delivery in 2008. "The mills in Toledo are constantly taking Canadian white wheat in, and around Buffalo too," Fortis Clearing Americas analyst Charlie Sernatinger said.
"From a fundamental standpoint, I don't think it means anything. It's an old contract and it's routine business. But there is no question that the material arriving had a psychological effect on the spreads today," he said. Dry weather remains a background concern in the US winter wheat belt, with more rain needed in south-west areas of the Plains.
The US Department of Agriculture late Monday said 82 percent of the US winter wheat crop was planted, slightly behind the 84 percent five-year average. USDA said 57 percent of the crop had emerged, lagging the five-year average of 64 percent.