Heavy Selling in the Wheat Pit

Rains in Argentina and Australia contributed to weakness.

Optimism in the wheat market last week disappeared like a puff of smoke in a breeze, and it didn't take much to touch off heavy selling. The bearish technical signals of the previous week gave way to a violation of trendline support on Monday, and that was all the push futures needed to fall off a cliff.

Large global supplies of wheat were one reason cited for the weakness, but really, these numbers have been in the market for a while. Better rains in Argentina and Australia also removed a source of support, and there were indications U.S. wheat was getting priced out of the market after being competitive at lower levels.

Improving moisture for winter wheat seeding also helped dent the market's enthusiasm. Though dry areas remain, key regions like Kansas and Ohio are in better shape, with more storms likely over the next two weeks. Even though Farm Futures initial survey of planting intentions shows farmers ready to cut acreage, the 2009 balance sheet doesn't show much of a change, with supplies still at burdensome levels. And, the survey was taken before moisture levels improved.

For Bryce Knorr's complete weekly wheat review, click HERE.

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