January 19, 2008

 

US Wheat Review on Friday: Climbs on supply fears; Minneapolis Grain Exchange sees new high

 

 

U.S. wheat futures soared Friday amid supply concerns, with nearby Minneapolis Grain Exchange wheat scoring a new all-time high for the third consecutive session, traders said.

 

MGE March wheat set a new record of 11.94 3/4 per bushel, topping the previous high of US$11.94. That is the highest price ever for any wheat contract at a U.S. exchange.

 

Chicago Board of Trade March wheat closed up 22 cents at US$9.62 1/2 per bushel. Kansas City Board of Trade March wheat climbed 29 3/4 cents to US$10.11 1/4, and MGE March wheat ended limit up, 30 cents higher, at US$11.94 3/4.

 

CBOT and KCBT wheat futures were on the defensive early in the day session as traders booked profits ahead of the long weekend, while MGE wheat climbed. The CBOT, KCBT and MGE are closed Monday in observance of the Martin Luther King Jr. holiday.

 

Spillover support from gains at the MGE helped support a late rally in at the CBOT and KCBT, traders said. Position-squaring ahead of the weekend and local buying also boosted prices, they said.

 

Talk about the potential for export news to be announced during the long weekend may have inspired buying, said Mike Zuzolo, analyst for Risk Management Commodities. There was some speculation that Iraq may issue a tender and that Pakistan may annouce export news, he said.

 

Pakistan Trading Corp. received 13 bids in a tender to import around 610,000 metric tonnes of wheat, a senior company executive said Friday. The highest quoted price by the bidders was at US$653 per tonne, cost and freight basis, and the lowest price was quoted at US$450 per tonne, the official said. The company received bids from global trading companies including Glencore, Cargill and Bunge, he said.

 

"Be prepared for weekend wheat tenders to be announced by larger importing countries," Zuzolo said.

 

Private analytical firm Informa Economics on Friday pegged 2008-09 U.S. winter wheat seedings at 46.6 million acres, down 2.1 million from its December estimate, traders said. The projection didn't have much of an impact as it was in line with the USDA's estimate of 46.61 million, a CBOT floor analyst said.

 

Looking forward, wheat futures should feel strength from some follow-through buying Tuesday, Zuzolo said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures were weaker early on a profit-taking pullback, traders said. The market rebounded late on some pre-weekend short-covering as traders were reluctant to be short heading into the long weekend, he said.

 

Cold weekend weather poses little threat to dormant winter wheat in the U.S. Midwest or the Plains, said Andy Karst, meteorologist with World Weather Inc. In HRW wheat areas of the Plains, snow should fall on uncovered areas in central Nebraska and northeastern Colorado before the weather turns too cold, Karst said. That will help protect the wheat.

 

Some Midwest soft red winter wheat areas don't have enough snow cover either, but "our opinion is that it's been cold enough lately that the crop is hardened enough to prevent significant damage," Karst said. "There's also plenty of soil moisture in the region and that will help a little bit of ice form around the base of the plant. That should help insulate it, too."

 

 

Minneapolis Grain Exchange

 

MGE wheat futures led the upside amid ongoing supply concerns and strong cash demand, traders said. MGE March wheat has set a record high in each of the past three trading sessions.

 

Informa forecast spring wheat seedings at 12 million acres, traders said. In 2007, spring wheat other than durum was planted on 13.297 million acres, according to the USDA.

 

The private estimate was seen as bullish, traders said. Spring wheat is battling over land in the northern Plains with corn and soybeans.

 

"I think that Minneapolis still has to buy some acres," said Roy Huckabay, analyst with the Linn Group.