US wheat futures closed sharply lower on Wednesday, following declines in corn, soybeans, crude oil and gold as large speculators sold on fears of an economic recession, traders said. US stocks were volatile, with the Dow Jones industrial average at one point falling more than 2 percent.
Stocks later rallied, advancing more than 2 percent after the close at the Chicago Board of Trade. But the Dow's early declines set the tone in grains. "All the (grain) markets are reacting to the recessionary concerns, first from the long-term view that it could reduce demand. In the short-term view, people are just getting out of the market due to the uncertainty," said Shawn McCambridge, an analyst with Prudential Financial.
Wheat futures on the CBOT and the Kansas City Board of Trade fell the daily limit of 30 cents and settled at or near those levels, with front months at both exchanges down 3 percent. CBOT March wheat ended 29 cents lower at $9.05 per bushel, with new-crop July down 30 cents at $8.60-3/4.
The July traded synthetically through wheat options at $8.48 at the close, indicating a lower open in that contract when trade resumes during Asian trading hours. Traders said the July was correcting after closing sharply higher on Tuesday in thin volume.
Commodity funds were net sellers of 5,000 CBOT wheat contracts on Wednesday, traders said. At the KCBT, March wheat closed down the 30-cent limit at $9.54-3/4, with new-crop July down 30 at $9.14-1/2. Minneapolis Grain Exchange spring wheat posted smaller declines and traded higher at times on continued demand for extremely scarce old-crop supplies. The spot MGE March contract fell 12 cents, or 1 percent, to close at $12.07 per bushel.
However, during Asian trading hours, March spring wheat had surged to $12.45, a new all-time high for any US wheat contract. Volume at the CBOT was estimated at 80,207 wheat futures, down from 119,982 on Tuesday, and 14,850 options. Volume in Kansas City was estimated at 15,539 contracts, down from 20,463 on Tuesday.
Minneapolis volume was estimated at 13,536 contracts, up from 10,989 on Tuesday. The broad-based declines in commodities overshadowed concerns about continued cold weather and potential winterkill in the US Plains hard red winter wheat belt. Most core crop areas had a protective cover of snow.
Export news featured Pakistan buying 60,000 tonnes of red milling wheat, in addition to the roughly 500,000 tonnes it bought this week. Origins were optional but likely sources were thought to be from the Black Sea/Central Asia and South America. Turkey bought 100,000 tonnes of milling wheat from Kazakhstan in a tender that closed this week.