Wheat back around $7.50 again (after visiting $9.50+) .......................................
November 9, 2007
Wheat Futures Drop on Poor Export Sales
Order Cancellations Are Poised to Rise Amid Lower Prices
By TOM POLANSEK
Wall Street Journal
Wheat futures tumbled as weekly export sales sank to a marketing-year low and countries backed out of previous purchases made at higher prices, analysts said.
Benchmark Chicago Board of Trade December wheat fell 25.75 cents to $7.62 a bushel, its lowest close since Aug. 29. The contract has eased nearly $2 off its all-time high of $9.6175, set Sept. 28.
Prices collapsed after the Agriculture Department reported export sales for the week ended Nov. 1 were 14,600 metric tons, 98% below the prior four-week average and well below trade expectations.
Significant cancellations and buybacks helped keep sales in the dumps. Countries that bought U.S. wheat near record highs have been opting out of their purchases now that prices are lower and will likely continue to do so, analysts said.
Prices climbed this summer and fall as global production problems stoked fears about supply shortages and prompted countries to overbuy on wheat, said Tim Hannagan, analyst for Alaron Trading in Chicago. Now, there is no more fear that the world will run out of wheat, he said.
"They were overbooking and overbuying wheat, thinking we could have $13 wheat or something," he said, referring to importing countries. "Nobody knew. Those same countries that were panic buying are now not buying at all."
Egypt, a major buyer on the world market, helped push wheat futures to record levels this summer with a string of large purchases. However, in the past week, it canceled an order for 57,000 tons of soft red winter wheat, used in cakes and pastries.
Countries will live hand-to-mouth, buying wheat only as they need it, Mr. Hannagan said. If they can, many importers may defer purchases until next year, when prices are expected to fall due to increased production, he said.
In other commodities markets:
CRUDE OIL: Futures fell for the second day in a row after price support from oil-supply disruptions, in places such as the North Sea, was undercut by deepening worries about the U.S. economy. Light, sweet crude for December delivery fell 91 cents, or 0.9%, to settle at $95.46 a barrel on the New York Mercantile Exchange.
COPPER: Futures declined as participants continued pricing in global economic worries and inventories kept rising. There was little reaction to BHP Billiton's offer to buy rival miner Rio Tinto. The nearby November copper contract fell 5.40 cents to $3.1970 a pound while the most-active December copper contract fell 5.5 cents to $3.2040 on the Comex division of Nymex.
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