May 13, 2008

 

US Wheat Review on Monday: Ends mixed; spreading lifts Minneapolis Grain Exchange May, July

 

 

U.S. wheat futures ended mixed Monday, with nearby Minneapolis Grain Exchange contracts climbing sharply higher in thin volume, traders said.

 

Chicago Board of Trade July wheat closed up 1 cent at US$8.05 1/2 per bushel. Kansas City Board of Trade July wheat slipped 2 1/2 cents to US$8.43, and Minneapolis Grain Exchange July wheat rose 45 cents to US$10.48.

 

CBOT wheat futures firmed up late in the session amid some light position-evening and unwinding of short wheat/long corn spreads, traders said. Wheat has been the short leg of a host of spread trades lately, a broker said.

 

Bearish expectations for a record world wheat crop continued to hang over the markets, said Larry Glenn, owner of Glenn Commodities. The U.S. Department of Agriculture on Friday estimated global 2008-09 production would be up about 8% from 2007-08 and pegged U.S. winter wheat production above trade expectations.

 

"I think in the back of traders' minds, they're still remembering the report and the extra bushels we had out there," Glenn said.

 

News out for the markets was mixed, traders said. On the bullish side, Iraq said it was tendering to buy 50,000 tonnes of hard wheat. Analysts also estimated Argentina would cut wheat plantings in 2008-09 due to dry weather and disruptions caused by an ongoing conflict between farmers and the government.

 

However, forecasts for a wetter trend in parts of Australia were seen as somewhat bearish, Glenn said. Australia has suffered from a severe drought for the past two years.

 

Commodity funds were seen as even at the CBOT.

 

 

Kansas City Board of Trade

 

KCBT wheat futures were under pressure from reports that the U.S. hard red winter wheat crop is in good condition. The USDA is expected to raise its winter wheat good-to-excellent rating by one to two percentage points in its weekly crop progress report, due out at 4 p.m. EDT, analysts and traders said.

 

The UDSA on Friday pegged Kansas' crop at 357.2 million bushels, while the Wheat Quality Council's annual hard red winter wheat tour last week estimated it at 379.1 million. The difference illustrates "the attitude that there's more wheat out there than the USDA was thinking," Glenn said.

 

 

Minneapolis Grain Exchange

 

MGE May and July wheat finished sharply higher as market participants bought old-crop contracts and sold the new crop, traders said. ADM and UBS were noted as buying July and selling September, a floor trader said.

 

The USDA will issue an update on spring wheat planting in its weekly progress report. Traders said they expect seeding to be about 74% to 75% complete, up from 58% last week.