February 11, 2008

 

CBOT wheat breaks record as US wheat stock near 60-year lows
 

 

CBOT May wheat has broken through the pyschologically-significant US$11 a bushel barrier and is currently limit-up, or 30 cents higher than Thursday night's close, at US$11.09/bu.

 

Meanwhile, USDA's Friday report lowered US wheat ending stocks for the 2007-08 marketing year by 20 million bushels, making the projected carryout the lowest in 60 years.

 

Chicago Board of Trade wheat futures continued their relentless gains with fresh all-time highs set in Friday morning trade, breaching record highs set at Thursday night's US close.

 

CBOT's March wheat contract is also 30 cents higher at a new record of US$10.93/bu.

 

The underlying theme in the wheat market over the past several sessions has been strong global demand and historically low wheat inventories.

 

Similarly, tight stocks and good demand for soy have pushed up CBOT soy futures, with March soy up 22 cents from Thursday night's close at US$13.53/bu. Momentum in wheat and soy futures is also supporting corn, with March corn up 10.2 cents at US$5.09/bu.

 

According to USDA's monthly supply and demand report, US wheat stock is now seen totaling just 272 million bushels, down from the government's January forecast of 292 million bushels.

 

"At 272 million bushels, this year's ending stocks are the lowest since 1947-48," the USDA said. "Ending stocks as a percentage of use (stocks-to-use) at 12 percent would be the lowest since 1946-47."

 

Stronger-than-expected exports, the USDA said, more than offset an expected reduction in feed and residual use. "Exports are raised 25 million bushels with hard red spring wheat increased 20 million and soft red winter wheat increased 5 million," the USDA said in the report.

 

The new wheat export forecast for 2007-08 is for 1.2 billion bushels, up from the January prediction of 1.175 billion bushels.

 

The prediction for feed and residual use was lowered Friday to 110 million bushels, down from 115 million.

 

The USDA left its average farmgate price forecast unchanged at US$6.45 to US$6.85 per bushel, "well above the record of US$4.55 per bushel in 1995-96."