January 11, 2008

 

US Wheat Review on Thursday: Finishes mixed ahead of USDA report

 

 

U.S. wheat futures ended mixed Thursday amid late pressure from index fund selling at the Chicago Board of Trade, traders and analysts said.

 

Chicago Board of Trade March wheat closed down 7 cents at US$8.82 1/2 per bushel. Kansas City Board of Trade March wheat jumped 5 cents to US$8.94, and Minneapolis Grain Exchange March wheat rose 2 3/4 cents to US$10.32 3/4.

 

Index funds are selling wheat as part of their annual rebalancing. Firms including Newedge USA LLC, Fortis and JP Morgan sold about 3,000 contracts, a CBOT floor broker said.

 

Traders are waiting for the U.S. Department of Agriculture to release its January crop report at 8:30 a.m. EST Friday. Short-covering ahead of the report helped boost prices earlier in the session, with market participants reluctant to be long, an analyst said.

 

The report will include estimates on 2008 winter wheat plantings, 2007-08 U.S. ending stocks and grain stocks as of Dec. 1. The projections will give the markets direction Friday, a CBOT floor analyst said.

 

Analysts expect the report to show a significant increase in plantings after U.S. wheat futures rallied to new all-time highs in 2007. The average of analysts' estimates for seedings is 48.657 million acres, up from 44.987 million a year earlier, according to a survey of 14 analysts.

 

The average of analysts' estimates for wheat ending stocks is 274 million bushels, down from 280 million in December, according to a survey. The average of analysts' estimates for wheat stocks as of Dec. 1 is 1.116 billion bushels, down from 1.315 billion a year earlier.

 

The USDA on Thursday released its weekly export sales report. U.S. wheat sales for the week ended Jan. 3 were 190,900 metric tonnes, while trade estimates were 150,000 to 400,000 tonnes.

 

 

Kansas City Board of Trade

 

KCBT and MGE March wheat ended firmer amid commercial buying, said Don Moneyheffer, owner of Moneyheffer Commodities. There also was some inter-market spreading, with traders buying KCBT wheat against CBOT wheat, analysts said.

 

The spreading makes sense as farmers are thought to have expanded seedings of soft red winter wheat, traded at the CBOT, by a larger percentage than hard red winter wheat, traded at the KCBT, said Larry Glenn, owner of Glenn Commodities.

 

The average of analysts' estimates for seedings of SRW wheat, used for pastries and snack foods, is 9.994 million acres, up about 16% from 8.65 million a year earlier. The average of analysts' estimates for seedings of HRW wheat, used in bread, is 34.883 million acres, up almost 6% from 32.94 million a year earlier.

 

 

Minneapolis Grain Exchange

 

Solid commercial demand helped support nearby MGE wheat and erase early weakness, a MGE trader said. The weak export sales did not attract too much attention, as the reporting period included the New Year holiday, he said.

 

"When we were lower, there was good commercial demand that was in here," the MGE trader said. "The back-months have sure seen good commercial demand."