May 7, 2008

 

US Wheat Review on Tuesday: Gains on rallies in neighboring markets

 

 

U.S. wheat futures closed higher Tuesday, but slipped off their highs as a rally in neighboring markets mellowed, a CBOT floor trader said.

 

Chicago Board of Trade July wheat closed up 12 1/2 cents to US$8.18 a bushel. Kansas City Board of Trade July wheat gained 8 cents to US$8.64 and Minneapolis Grain Exchange July wheat added 30 cents to US$9.75.

 

CBOT soybeans closed lower after seeing strong early gains. Wheat's short-term momentum followed gains in July corn, which ended up 12 1/4 cents to US$6.06 1/4, off its session high.

 

But wheat's rally won't hold for long, as the wheat markets are still "rounding out the bottom" with maybe 30-40 cents more to slip, said Northstar Commodities analyst Jason Ward. For the next two weeks he sees wheat rangebound.

 

"It's that time of year, we're just waiting to see how the crop's coming in," he said.

 

Harvest of the U.S. winter wheat crop should begin in a couple weeks. People expect an influx of wheat to ease tight stocks.

 

Ward linked today's wheat rally to crude oil. Goldman Sachs predicted a "super-spike" in crude oil to as much as US$200 per barrel in the next 6-24 months.

 

"It's ignited speculative interest ... and wheat's along for the ride," Ward said.

 

Big trades came late from both sides at the CBOT, a trader said. Commodity funds bought an estimated 2,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

Scouts on the Wheat Quality Council's Hard Red Winter Wheat tour described conditions in six Kansas counties as about average with the potential for a slightly better-than-average crop.

 

The crop is running about one week behind normal development, though one Ottawa county producer said his wheat may be ready to head in seven to 10 days if the weather turns warmer and drier.

 

Scouts found that disease pressure has been minimal, with powdery mildew found in only one field in Mitchell County, while some weed pressure has been seen but is not considered problematic, tour scouts said.

 

The average of six fields surveyed was 52 bushels an acre.

 

 

Minneapolis Grain Exchange

 

Traders will look for a grain stocks report to be released by Statistics Canada Wednesday morning and continue to look to the weather for evidence of its effect on spring wheat as well.

 

The combination of dryness and colder-than-normal temperatures has slowed emergence to 11% compared to the five-year average of 25%, with Minnesota especially affected, says Cropcast Agricultural Weather.

 

Right now, the most concerning dryness is seen across North Dakota, parts of Montana and Idaho and in southern Alberta in Canada, the private meteorological firm said. The next five days should provide plenty of moisture to improve soils across the southern tier of Canada, and should at least cover North Dakota's short-term moisture needs for wheat crop germination.

 

Aside from a brief short-term warm-up, the majority of the next couple weeks is still forecast to stay on the colder side of normal, slowing the overall crop development, Cropcast said.