April 23, 2008

 

US Wheat Review on Tuesday: Rises on CBOT corn, soybean spillover

 

 

U.S. wheat futures closed mostly higher Friday on spillover support from rallies in Chicago Board of Trade corn and soybeans, traders said.

 

CBOT July wheat rose 6 1/2 cents to US$8.66 per bushel. Kansas City Board of Trade July wheat gained 4 cents to US$9.12, and Minneapolis Grain Exchange July wheat settled up 4 cents at US$10.09.

 

Trading was choppy during the day session, with wheat shaking off earlier losses. The markets remain technically weak and there are bearish expectations for an increase in global production, analysts said.

 

"Of all the markets, it's the one that can replenish" supplies, Jason Britt, analyst and broker for Central State Commodities, said about wheat.

 

An assortment of bullish fundamental news arose, with Egypt buying 120,000 tonnes of U.S. soft red wheat and 85,000 tonnes of Russian wheat. The U.S. Department of Agriculture announced private exporters sold 100,000 tonnes of U.S. hard red winter wheat to Iraq for delivery in 2008-09.

 

Still, wheat was "definitely coming along kicking and screaming" to the upside, Britt said. Commodity funds bought an estimated 1,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

KCBT wheat futures were following activity at the CBOT, a floor trader said. The export business and a decline in weekly USDA crop condition ratings provided some underlying support, he said.

 

The USDA said 45% of the winter wheat crop was rated good to excellent, down from 47% last week and 54% a year ago. In Kansas, 42% of the crop was seen as good to excellent, down from 45% last week.

 

"You took the crop ratings down a little bit, and you had some export news that was favorable for the soft red and the hard red," a trader said. There also was "a little bit of turnaround Tuesday mentality" in the market after a sell-off Monday.

 

The markets will continue to watch the weather closely, traders said. There are bearish forecasts for rain in south-central Plains wheat areas of the Plains

 

 

Minneapolis Grain Exchange

 

MGE spring wheat futures were a follower of the CBOT and KCBT, a floor trader said. MGE wheat is "pretty much a nonfactor right now," he said.

 

There is not much news out for the market, and participants are "waiting for the next big story," a trader said. Spring wheat planting was 20% complete as of Sunday, up from 8% last week and compared to the average of 23%.