March 7, 2008

 

US Wheat Review on Thursday: Markets close mostly up; Minneapolis Grain Exchange may bucks trend

 

 

U.S. wheat futures closed mostly higher Wednesday amid technical and fund buying, with underlying support seen from global demand, analysts said.

 

Minneapolis Grain Exchange May bucked the trend and fell the exchange's, daily limit of 60 cents for the fourth consecutive session.

 

Chicago Board of Trade May wheat rose 20 cents to US$11.25 per bushel. Kansas City Board of Trade May wheat closed up 7 3/4 cents at US$11.82 1/2, and MGE May settled 60 cents lower at US$13.79 3/4.

 

CBOT wheat futures rallied to close higher after slipping earlier in the day session amid spillover pressure from limit-down moves in the CBOT soy complex. There was some technical buying and unwinding of soybean/wheat spreads, a trader said.

 

Global demand for wheat offered some fundamental support, said Larry Glenn, owner of Glenn Commodities. Japan said it bought 117,000 metric tonnes of wheat, including 50,000 tonnes of U.S. semi-hard wheat and 21,000 tonnes of U.S. western white wheat, in a routine tender concluded Thursday.

 

Jordan said Wednesday it was tendering to buy 100,000 metric tonnes of hard wheat, of any origin, on a cost and freight basis. Iraq's state grain board this week issued a new tender to buy 50,000 tonnes of hard wheat from any origin, according to a news report.

 

"I think there's a little bit more demand interest out there," Glenn said. "You still have some tenders, and Japan finished their deal."

 

However, weekly wheat export sales were below trade expectations. The U.S. Department of Agriculture said total sales for the week ended Feb. 28, including old-crop and new-crop business, were 505,300 tonnes. Analysts had expected sales of at least 550,000 tonnes.

 

Net sales for delivery in 2007-08 were 431,900 tonnes, but traders already knew about a previously announced sale of 400,000 tonnes of hard red winter wheat to Iraq. Old-crop cancellations and buybacks of 195,600 tonnes were considered large, an analyst said.

 

"I wasn't impressed with the weekly sales report," Glenn said.

 

Fund buying also helped boost prices a bit, traders said. Commodity funds bought an estimated 1,000 contracts at the CBOT.

 

Deliveries against the CBOT March wheat future were 408 contracts. The last trade date assigned was Feb. 26.

 

 

Kansas City Board of Trade

 

KCBT wheat futures kept an eye on CBOT wheat and soy complex during the day session, a floor trader said. Limit-down moves in CBOT soybeans and soyoil temporarily put KCBT wheat on the defensive, he said.

 

Weakness in the U.S. dollar was seen as supportive, along with scattered expectations that demand will remain strong, an analyst said. Pakistan may have to import as much as 2 million tonnes of wheat as its domestic crop won't meet expectations, according to a media report.

 

There were three delivery intentions against the KCBT March wheat future out of Hutchinson, Kan., and 258 redelivery intentions. The oldest trade date was March 5.

 

 

Minneapolis Grain Exchange

 

MGE May wheat closed limit down but wasn't trading synthetically lower at the close, a floor trader said. The contract during the day was bid as much as 40 cents below limit and offered about 10 cents below limit, he said.

 

Deferred months at the MGE felt support from an ongoing battle for acres in the U.S. northern Plains with corn and soybeans, the floor trader said. Nearby contracts, which represent the old crop, aren't competing for acreage.

 

There were no deliveries against the MGE March wheat future.