CBOT Owner Resists Wheat Restrictions

Wheat Markets

The attempt by the government to regulate and interfere with the wheat market could be another disaster in the making, as the completely foolish, misguided and clueless Democrats continue their assault on free markets.

According to Charles Carey, vice chairman of CBOT owner CME Group Inc., government restrictions on trading "are more likely to be harmful to the functioning of our markets than helpful," and he's absolutely right.

The idea that we should have some type of perfection in place so no one ever gets hurt is outrageous, socialist and fascist to the core. Short term fluctations in wheat prices will never last, and that's the illusory problem the goofy Democrats think needs to be solved.

Unbelievably, federal regulators are "seriously considering" restrictions in the wheat futures market being urged by lawmakers concerned over speculation they say has artificially inflated prices, supposedly interfering risk management by farmers and grain processors.

After a wasted year and time, a faux investigation by the investigative panel of the Senate Homeland Security and Governmental Affairs Committee found that the disconnect between the wheat futures and cash markets can mean higher prices for consumers. They say this with a straight face when corn prices and lack of planting of wheat does more to jack up the prices because of other government interference through subsidies from taxpayers dollars.

A number of senators have called on the Commodity Futures Trading Commission to restrict the volume of index trading in the wheat futures market on the Chicago Board of Trade, a completely ridiculous idea.

Foolishly, CFTC Chairman Gary Gensler told the Senate subcommittee at a recent hearing that the agency "is seriously considering this recommendation ... (and) will continue to closely monitor the performance of the wheat futures contract."

Democrat Panel chairman Carl Levin, ignorantly said such a review "is badly needed." Several other members of the committee, representing farm states, voiced concern about the impact of market problems on wheat producers in those states.

Again, to me much of this is to hide the real culprit in wheat prices, federal subsidies of corn for the failing corn-based ethanol industry, which is pushing up prices because of less acreage used for wheat because of the artifical price increases created by the U.S. government.

But an official of the company that operates the Chicago Board of Trade, where wheat futures are traded, opposed such constraints and disputed the Senate probe's findings, as mentiond above from Charles Carey's accurate comments.

The idea of attempting to manipulate the market by the U.S. government and Democrats will fail, as the utopian idea of reducing risk is completely foolish and always fails, and the wheat and commodities markets overall will suffer.

Commodity indexes include futures contracts for delivery in different months. Commodity index traders sell financial instruments whose values rise and fall along with the value of the index on which they are located.

Commodity index traders acquire wheat futures to help offset their risk from selling the instruments to third parties. That pumps billions of dollars into the market and lifts demand and prices for wheat futures, the faulty results of the Senate investigation found.

Other related to the risk factors are also whining about the alleged discrepencies, as one person representing the American Bakers Association and the Sara Lee Corp said at the hearing, "Bakers cannot escape the impact. Today's volatility represents millions of dollars daily in undue financial risk."

What this disingenous bureaucrat doesn't say is this has always been the case, and the those that manage this risk factor are the ones who win. In the stimulous and spirit of bailing out company after company, those that can't compete are attempting to make it look like something unusual is happening, when in fact it has been the practice and way of doing business for a long time.

The one who knows about this the best is Charles Carey, vice chairman of CBOT owner CME Group Inc., and he concludes that the findings of the Senate report "are based on faulty economic analysis and a misunderstanding of basic market economics."

Just look at what the Democrats and Obama are doing to destroy America with its socialist and fascist policies, and you can easily understand how this group of politicians are among the most inexperienced and naive in American history; in both foreign and domestic policy, and they need to just shut up and let the free market work things out, which it always has done.

Wheat Markets

CBOT Limits Ag Receipts Held by Non-Grain Companies to Improve Performance of Hedging

In response to pressure over the last year, the CBOT has responded to requests from its regulator, the Commodity Futures Trading Commission, and will now limit the number of warehouse receipts and grain shipping certificates a non-grain company can hold.

This is especially targeted to soft red winter wheat contracts, to improve its hedging effectiveness, which has been dismal for some time. At the same time it'll help other grain contracts like corn, rice, wheat, oat, soybean, soymeal and soyoil.

Starting on February 17, the Chicago Board of Trade will enact the limits on the non-grain holding companies that hold grain shipping certificates or warehouse receipts, which will be given until May 31 to comply with the new rules.

Here are the parameters below:


Commodity - Limit


Corn shipping certificates - 600*
Soybean shipping certificates - 600*
Wheat shipping certificates - 600*
Soybean oil warehouse receipts - 540
Soybean meal shipping certificates - 720
Oat shipping certificates - 600
Rough rice warehouse receipts - 600

*Includes certificates for CBOT mini-contracts.

Cold Weather Drives Up Weekly Wheat Prices

With the bulls concerned over the first strong cold weather of the season possibly may damage the dormant wheat crops, prices for the week ended up.

Even though Friday prices were softer, the overall week had KCBT wheat rising by 44.75 cents to $5.83 a bushel, MGE grew by 35.25 cents to $6.2525 a bushel and March CBOT led them all, gaining 50.25 cents to finish the week at $5.6325.

Although there was worries over the weather, a number of meteorologists suggested the cold spell probably wouldn't do enough damage to the crops to make much of a difference. Even so, prices rose on the possibility.

Weather will be especially rough in the central and southern Plains, with below-zero forecasts in the mix. Some of the concern was directed to areas that had little or no snow to protect from the bitterly cold temperatures.

Of course it won't be known until the spring if the dormant crop really had any damage to it, so it's a wait-and-see game at this time.

Spring wheat traded on the MGE hasn't been planted yet.

Wheat Rises as Australian Harvest Delayed by Drought

Wheat rose today on news in a statement from the Australian Bureau of Agriculture and Resource Economics which said drought conditions could significantly delay the Australian wheat harvest, and also could have a detrimental effect on the quality of the grain produced.

This seems like it's only a upward blip in the road, as there's so much wheat available for export this year, any news will cause a slight upward movement for wheat.

The December crop report from the Australian Bureau of Agriculture and Resource Economics shows wheat exports for the country are expected to reach 12.3 million tons, a significant increase from the 7.5 million tons exported last year.

With Australia attempting to compete in the premium wheat market of Taiwan, this probably couldn't have come at a worse time.

At 10:30 a.m. today on the Chicago Board of Trade, wheat futures for March delivery rose 2.5 pecent to $4.93 a bushel.

Good Condition of U.S. Winter Wheat Crop Causes Prices to Drop

The U.S. Department of Agriculture report was so good for wheat, that it has exceeded last year's condition by a whopping 55 percent for the same time frame.

As of October 26, 65 percent of winter wheat was in either good or excellent condition said the USDA report.

With the plethora of wheat available, wheat futures dropped 15.5 cents to $5.14 a bushel on the Chicago Board of Trade.

Much of this abundance came because farmers saw the amazing price of $13.495 a bushel on February 27, and so planted far too much, thinking it would profit them. Unfortunately, they never seem to learn that once the price has elevated to such levels, there was no way it could continue on because of the obvious surge in planting, which would ultimately drive the prices down, as supply increased. That, of course, is what has happened.

Another key factor has been the abundance of rain, which along with the huge sowing, has produced a huge crop.

Global wheat harvests could increase by 11 percent to reach a record of 680.2 million tons. It's also estimated that stockpiles around the world could grow by 21 percent to 144.4 million tons, according to the USDA.

US Wheat Plunges on Economic Fears and Pressure

Commodities continue to take a beating as the markets worldwide become under increasing pressure. Wheat suffered along with most others as they tumbled on all the exchanges.

Along with the economic conditions, other factors were the stronger U.S. dollar and the drop in price of soybeans and corn. A stronger U.S. dollar makes investments in commodities less attractive to foreign traders.

The outlook for 2008 through 2009 looks somewhat grim for wheat, as outside pressures of the global economy continue and the projected record wheat crop drives prices further down.

Along with U.S. wheat production, Canada is raising its wheat production forecast, as are many other countries.

Much of that is because of increased number of acres being planted in wheat as well as expected good weather conditions.

On the Chicago Board of Trade December wheat dropped by 45 cents to $5.95 1/4 a bushel for December. December wheat on the Kansas City Board of Trade fell 42 1/4 cents to $6.28 1/4 a bushel, while December wheat declined by 38 cents to $6.64 3/4 on the Minneapolis Grain Exchange.

US Wheat Follows Other Commodities Down

With no fresh news on underlying wheat fundamentals, the grain followed other commodities down based on the unsurety of the economic bailout of the financial sector in the U.S.

December wheat at the Chicago Board of Trade fell by 20 1/4 cents to $7.16 a bushel as investors held back with the weekend coming up and the economic uncertainty.

The Kansas City Board of Trade followed suit as it came under pressure as well. December wheat fell by 19 1/2 cents to $7.16 a bushel.

There were also concerns about demand needing to increase after Egypt and Iran decided to acquire wheat from Russia this week.

As usual, the Minneapolis Grain Exchange followed in the footsteps of its CBOT cousin, also experiencing a decline to $7.89 3/4 a bushel, a 16-cent fall.

Traders are looking for direction from the quarterly grain stocks and small grain reports by the U.S. Department of Agriculture at 8:30 a.m. EDT Tuesday. Although an estimate, it'll help give a better picture on the actual usage of the grain.

It is thought at this time that the report will say wheat production for August fell from the expected 2.462 billion bushels originally estimated to 2.459 billion bushels.

Wheat Joins Commodity Rally as Investors Flee Equities

With the U.S. dollar falling and investors fleeing equities, the commodity market surged today as many of the dollar-denominated commodities enjoyed a significant uptick. Wheat was part of the swing.

Wheat futures in the U.S. increased by 5 percent Wednesday, moving up from its lowest level in over a year.

December wheat futures on the CBOT ended at $7.25-3/4 a bushel, up 35-3/4 cents, a 5.18 percent move upwards.

Even the news that Egypt decided to buy 205,000 tons of wheat from Ukraine and Russia wasn't enough to pressure the grain, as numerous economic factors lined up to give it a solid push forward.

High global wheat inventories have been putting downward pressure on wheat prices recently.

Wheat Climbs to Eight-week High On Weak Dollar, Surge in Crude Oil

Wheat enjoyed a comeback on Thursday, as it reached an eight-week high, as crude oil helped lift it up, along with a weakening U.S. dollar. Corn and soybean increases also helped push the commodity upwards.

On the CBOT, December wheat ended the session up 22 3/4 cents at $9.22 1/4 a bushel. December wheat at the Kansas City Board of Trade finished at 23 1/2 cents higher at $9.50 3/4, while December wheat at the Minneapolis Grain Exchange ended the session at $9.82 1/4, a 27 1/4 cent increase.

U.S. wheat export demand should remain strong, as weekly export sales for 2008-09 for the U.S. is at a marketing year high of 916,500 tons. The average of 522 million bushels of export wheat sales is about 10 percent above the five-year average. Wheat shipments are running at about 37 percent higher than the five-year average.

CBOT September Wheat Drops 14 1/4 cents to $7.65 3/4 a Bushel

Even though wheat partook in the plunge in prices of crop cousins soybeans and corn, it still held up pretty good taking all factors into consideration.

September wheat on the CBOT dropped by 14 1/4 cents to $7.65 3/4 a bushel, while Kansas City Board of Trade September wheat dropped 10 1/2 cents to $7.96, and Minneapolis Grain Exchange September wheat rose 1/2 cent to $8.53 3/4.

There were about 3,000 wheat contracts that sold on the CBOT today.

"I think, technically, it's acting fairly well," Alan Brugler, president of Brugler Marketing & Management, said of wheat. "I would attribute most of the selling to fund-type liquidation."

As far as their companion crops, November soybeans fell 47 cents to $12.22, while December corn declined 17 1/4 cents to $5.27 3/4.