March 6, 2008

 

US Wheat Review on Wednesday: Mostly up on surging outside markets

 

 

U.S. wheat futures settled mostly higher Wednesday on borrowed strength from outside markets, analysts said.

 

Chicago Board of Trade May wheat jumped 17 1/2 cents to US$11.05 per bushel. Kansas City Board of Trade May wheat rose 14 3/4 cents to US$11.74 3/4. Minneapolis Grain Exchange May wheat closed limit down, or 60 cents lower, at US$14.39 3/4.

 

Spillover support from outside markets like crude oil and metals helped boost wheat futures, traders said. Crude-oil futures set an intraday record high on the back of a surprise draw in U.S. oil inventories and a fresh low for the dollar. Gold futures also roared to record highs, and silver hit a 27-year peak.

 

The surging outside markets were "definitely the big factor" for wheat, said Jerry Gidel, analyst for North America Risk Management Services. Wheat was due for a bounce after markets tumbled Tuesday in a broad-based sell-off of commodities, traders added.

 

News of fresh global demand also was seen as supportive for wheat, traders said.

 

Jordan said it was tendering to buy 100,000 metric tonnes of hard wheat, of any origin, on a cost and freight basis. Half the wheat is for shipment April 10-25 and half is for shipment April 25 to May 10, an official said. The deadline for bids is March 18, he added.

 

Iraq's state grain board has issued a new tender to buy 50,000 tonnes of hard wheat from any origin, according to a news report. The bidding deadline is March 15, and bids must stay valid until March 20, the report said. No shipment times were specified.

 

Egypt's state-owned Food Industries Holding Co., meanwhile, is tendering to buy 40,000 metric tonnes of wheat, of any origin, for prompt delivery, an official said. The wheat will be purchased in Egyptian pounds and is for delivery on a free on truck basis.

 

Deliveries against the CBOT March wheat futures were light at 196 contracts, traders said. The last trade date assigned was Feb. 26.

 

 

Kansas City Board of Trade

 

Firm outside markets and the scattered demand news helped boost KCBT wheat futures, floor traders said. Deliveries against the KCBT March wheat future were 950 contracts.

 

Weekly wheat export sales, due Thursday from the U.S. Department of Agriculture, should be "decent" following news of a sale to Iraq last week, Gidel said. Analysts expect sales for the week ended Feb. 28 to be 550,000 to 900,000 tonnes.

 

The USDA on Feb. 27 announced private export sales of 400,000 metric tonnes of hard red winter wheat for delivery to Iraq in the 2007-08 marketing year. The wheat marketing year began June 1.

 

HRW wheat in western Texas may receive showers Wednesday night into Thursday, DTN Meteorlogix said. The precipitation will then move east, possibly bringing some rain into central and eastern Texas Thursday night, the private weather firm said. The surrounding areas are expected to remain dry.

 

 

Minneapolis Grain Exchange

 

MGE May wheat fell the exchange's daily 60-cent limit and was offered synthetically about 40 cents lower, a MGE floor trader said. It was the third consecutive day the contract ended limit down and its lowest close since Feb. 13.

 

Spot-month MGE March wheat is trading without limits because it is in delivery. It ended down 90 cents at US$16.00.

 

MGE spring wheat futures led a recent rally in wheat, and the March contract last month hit an all-time high of US$25. MGE wheat is likely to stay on the defensive as the market gives back its gains, although there may be some remaining demand out there, Gidel said.

 

"On the way up there, nobody was willing to sell" MGE March wheat, he said. "Now, there's nobody willing to buy on the way back down."

 

Volume was thin at the MGE, a floor trader said.

 

No deliveries were scheduled against the MGE March wheat futures.