US Wheat Review on Tuesday: Finishes mostly higher; Minneapolis Grain Exchange leads upside

 

 

U.S. wheat futures finished mostly higher Tuesday, with Minneapolis Grain Exchange wheat leading the upside amid continued uncertainty about prospects for the spring wheat crop, analysts said.

 

Chicago Board of Trade July wheat closed down 1/2 cent at US$6.12 a bushel. Kansas City Board of Trade July wheat closed up 1 3/4 cents at US$6.62 1/4, and Minneapolis Grain Exchange July wheat ended up 9 3/4 cents at US$7.54 3/4.

 

CBOT wheat traded both sides during the session amid ideas the market was due for a correction after gains last week, a trader said. Commodity funds sold an estimated 1,000 contracts.

 

Nearby July wheat was unable to take out last week's high in open-outcry trading. The contract hit a session high of US$6.16 1/2, compared to Friday's high of US$6.17.

 

CBOT wheat slipped despite strong gains in the neighboring soy market. July soybeans soared 19 1/2 cents to US$11.85 1/2 on worries about tightening old-crop supplies and strong demand.

 

It is bearish for wheat that the U.S. Department of Agriculture predicts the world will increase ending stocks for 2008-09 and 2009-10, said Alan Brugler, president of Brugler Marketing & Management. The USDA projects world 2008-09 soy ending stocks, on the other hand, will decline.

 

 

Kansas City Board of Trade

 

Strength in equities and crude oil was seen as "mildly supportive" to KCBT wheat, although a firm U.S. dollar was a bearish influence, a trader said. A stronger dollar makes U.S. wheat less competitive for export business.

 

The good-to-excellent rating for U.S. winter wheat is expected to improve 1 to 2 percentage points from 48% last week, Citigroup said in a note. The USDA will update its rating in a weekly crop progress report, due out at 4 p.m. EDT.

 

Wheat harvest is underway in Texas, and producers are test-cutting fields in Oklahoma, traders said. The market might feel a "little bit of hedge pressure" from the advancing harvest, but it should be less pressure than normal because drought and freeze damage have reduced production in the southern Plains, Brugler said.

 

 

Minneapolis Grain Exchange

 

MGE wheat led the upside as traders waited for the USDA to issue an update on U.S. spring wheat planting progress, an analyst said. Planting has been delayed this season due to cool, wet weather.

 

"We're still trying to wrestle with how much of the spring wheat got planted and at what point we're going to quit trying," Brugler said.

 

The markets Wednesday will react to the USDA's planting estimate, he said. Citigroup estimated 74% was planted as of Sunday, up 24 percentage points from a week earlier. The delay in seeding could prompt producers to shift acres to soybeans or other crops from spring wheat.