May 11, 2007

 

US Wheat Review on Thursday: Creeps lower ahead of USDA reports

 

 

U.S. wheat futures finished weaker Thursday as traders waited for the U.S. Department of Agriculture to release new estimates on production and ending stocks, analysts said.

 

Chicago Board of Trade July wheat edged down 1/2 cent to US$4.81 1/2 per bushel, Kansas City Board of Trade July wheat fell 5 3/4 cents to US$4.71 3/4, and Minneapolis Grain Exchange July wheat settled 2 3/4 cents lower at US$5.10 1/4.

 

The USDA is set to put out new estimates for all-wheat and all-winter wheat production, along with estimates for old- and new-crop ending stocks, at 8:30 a.m. EDT Friday.

 

A Dow Jones Newswires survey of analysts showed the average estimate for 2006-07 wheat ending stocks is 424 million bushels, compared to the USDA's April estimate of 422 million. The average analyst estimate for 2007-08 ending stocks is 500 million.

 

The average analyst estimate for all-wheat production is 2.158 billion bushels, up from 2006 production of 1.812 billion. The average analyst estimate for all winter wheat is 1.587 billion, up from 1.298 billion in 2006.

 

For hard red winter wheat production, the average analyst estimate was 974 million bushels, up from 682 million in 2006. The average analyst estimate for soft red winter wheat production was 368 million bushels, down from 390 million in 2006. For white winter wheat, the average production estimate was 245 million bushels, up from 225 million in 2006.

 

Losses in the CBOT corn market and ideas that the crop is recovering from a hard Easter weekend freeze also were negative for wheat, traders added.

 

Wheat was "feeling pressure from corn prices, which obviously is weather-related." Amid technical weakness and long liquidation ahead of Friday's supply/demand reports, CBOT corn slumped on ideas that clear skies and dry weather ahead will allow U.S. farmers to finish their planting, traders said.

 

Looking ahead, the supply/demand report will give the markets direction Friday, the traders added.

 

"There's quite a wide range of (production) expecations, especially for the Kansas crop," an analyst said. "There's probably quite a lot of room there for a surprise one way or another."

 

 

Kansas City Board of Trade

 

KCBT wheat futures led the downside.

 

Along with pressure from corn, a rebound in winter wheat condition appeared to be weighing on KCBT futures a little more than in Chicago or Minneapolis, an analyst said. The Kansas crop is not "the disaster we had last year," when the state suffered from a severe drought, he added.

 

Indeed, Kansas' hard red winter wheat appears to be on track for a better-than expected output after a hard spring freeze, said Allan Fritz, wheat specialist for Kansas State University.

 

"The wheat has recovered by and large more than I thought it would," Fritz said.

 

 

Minneapolis Grain Exchange

 

MGE saw some positioing ahead of the UDSA reports but did not have a strong feature to the day session, a floor trader said. The market shrugged off the export sales data, he added.

 

In other news, seeding of the grain crops in Western Canada was estimated at 16% complete, which would be ahead of the 10-year average of 9%, according to the Canadian Wheat Board's crop update for the week ended May 7. Warm, dry weather was needed in Saskatchewan and Alberta to boost planting progress.

 

Scattered rains and cooler conditions slowed seeding progress across Alberta and the Peace River region, with weekend rains in the central and northern areas not improving prospects for much activity in the coming week, the CWB said.