US wheat futures closed lower on Friday on profit-taking and long-liquidation by funds, and spillover from a plunge in the Chicago Board of Trade soya complex, traders said. CBOT soyabeans, soyaoil and soyameal closed down their respective daily trading limits as Chinese vegetable oil prices cooled. Corn futures also closed limit-down, pressured by soyabeans.
All the grains were retreating from record highs set within the last two weeks. Traders noted talk of some investment funds liquidating positions to meet margin calls in different financial arenas, including mortgage markets.
"This credit crunch is really grabbing people. We started to see hedge fund money pulled out of CTAs (commodity trading advisor accounts) last week," said analyst Roy Huckabay with the Linn Group.
CBOT May wheat settled down 20 cents at $11.05 per bushel, with back months down 11-1/2 cents to up 5 cents. Spot March, which expires next week, ended down 21-1/2 cents at $10.92-1/2. Funds sold 3,000 contracts, CBOT traders said. At the Kansas City Board of Trade, May hard red winter wheat ended down 13-1/2 cents at $11.69.
Minneapolis Grain Exchange spring wheat posted the biggest declines among the three US exchanges, with the May and July contracts falling the 60-cent limit. The limit in Minneapolis widens to 90 cents for Monday.
Funds have been taking profits in spring wheat since the MGE March contract surged to $25 a bushel on February 25, an all-time high for any US wheat contract, as a supply squeeze sparked panic buying. Also, cash spring wheat values have crumbled this week because exporters and domestic millers have met their immediate needs.
"Mills are covered for the next two months or so," a Minneapolis trader said. MGE May wheat fell 60 cents to close at $13.19-3/4 per bushel. Export business was quiet, but Iraq's Umm Qasr port has taken delivery of around 200,000 tonnes of mainly US HRW wheat from the big purchases of last year, trade sources in Amman said.
In the delivery market, deliveries of only two lots against the CBOT March contract were met by commercial stopping, with the Bunge house account taking all the wheat. In Kansas City there were 86 deliveries and 19 redeliveries on KCBT March, with the ADM house stopping 97 lots. There were no deliveries in Minneapolis.