April 6, 2007

 

US Wheat Review on Thursday: Rallies on cold weather fears

 

 

U.S. wheat futures rallied Thursday on fears that freezing weather will harm the developing winter wheat crop during a cold snap over the next several days, analysts said.

 

Chicago Board of Trade wheat closed 13 3/4 cents higher at US$4.45 per bushel, Kansas City Board of Trade May wheat rose 14 1/4 cents to US$4.69 1/4, and Minneapolis Grain Exchange May wheat finished 11 1/2 cents higher at US$4.97 1/2.

 

The DTN Meteorlogix weather firm called for much-below-normal temperatures to blanket the entire Midwest, Plains, and the northern half of the Mississippi Delta for the next five days. Temperatures will be in the teens to low 20s Fahrenheit across the Midwest and in the southwest Plains through the Texas and Oklahoma Panhandles, Meteorlogix said.

 

The weather pattern is unusual because it threatens soft red winter wheat, which is grown in the eastern third of the country and used to make pastries, and hard red winter wheat, which grows in the Plains and is used to make bread, said Bill Nelson, associate vice president of A.G. Edwards & Sons in St. Louis.

 

Crops in the Delta and southeastern states appear to be at the greatest risk for injury from the cold because a warm and dry March allowed plants to faster more than usual, agronomists said.

 

"Certainly as one looks at the low temperature forecasts for the next three mornings, we are flirting in areas were there's risk for moderate to severe damage, depending on the duration and depth of the cold," Nelson said.

 

Fund buying of an estimated 3,000 contracts also boosted prices at CBOT, traders said. In CBOT pit trades, Man Financial bought 1,000 May and 1,000 July, while Rand Financial bought 300 July. Fimat and Calyon each sold 300 May. Tenco spread 2,000 July/December.

 

In other news, private analytical firm Informa Economics on pegged total 2007-08 U.S. winter wheat production at 1.639 billion bushels, up 341 million from a year ago, traders familiar with the data said.

 

Informa estimated hard red winter wheat production at 983 million bushels, up 301 million from a year ago, the traders said. Soft red winter wheat production was pegged at 414 million bushels, up 24 million from last year, they said. Informa estimated white winter wheat production at 242 million bushels, up 16 million from last year, traders said.

 

 

Kansas City Board of Trade

 

Worries about that icy weather will damage the hard red winter wheat crop pushed KCBT wheat futures higher, a floor trader said. The crop has seen near ideal conditions so far, he added.

 

The U.S. Department of Agriculture released weekly export sales for the week ended March 29, which were not impressive for wheat, the trader said. The USDA reported sales totaled 214,000 metric tonnes, 60% below the previous week and 54% under the prior four-week average.

 

The sales were under trade expectations of 400,000 to 500,000 tonnes but still took a back seat to concerns about the weather, traders said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures mainly followed activity in CBOT wheat, a floor trader said. There was good flat price buying at the close and strong interest in spread trades throughout the day session, he noted. Popular spreads included May/July and July/September, he said.

 

Agricultural trading at the CBOT, KCBT and MGE will be closed Friday in observance of Good Friday.