US Wheat Review on Friday: Extends gains on fund buying, weak dollar

 

 

U.S. wheat futures closed modestly higher Friday on fund buying and weakness in the U.S. dollar, racking up major gains for the month.

 

Chicago Board of Trade July wheat rose 6 3/4 cents to US$6.37 1/4 a bushel. Kansas City Board of Trade July wheat ended up 6 1/4 cents at US$6.87, and Minneapolis Grain Exchange July wheat ended up 4 1/2 cents at US$7.72.

 

Money flows into commodities continued to support wheat, analysts said. Funds bought an estimated 4,000 wheat contracts at the CBOT.

 

CBOT July wheat traded an inside day after hitting a nearly five-month high Thursday. The contract's open outcry session high Friday was US$6.43 1/2 a bushel, compared to US$6.45 on Thursday.

 

CBOT July wheat closed up 24 3/4 cents on the week and US$1.00 3/4 on the month. Fund buying, short-covering and worries about delayed U.S. spring wheat planting were supportive in May.

 

Fungal diseases, such as head scab, that can reduce grain quality and yields remain a worry for soft red winter wheat in the Midwest and south, traders said. Scab, also known as Fusarium head blight, is "widespread" across Arkansas, according to a University of Arkansas wheat pathologist.

 

 

Kansas City Board of Trade

 

KCBT July wheat traded an inside day with an open outcry session high of US$6.94 1/2. That compared to Thursday's high of US$6.95 1/4, which was its highest price since Oct. 3. The nearby contract Friday ended up 26 1/2 cents on the week and US$1.02 1/4 cents on the month.

 

The sharp drop in the U.S. dollar was supportive for commodities, including KCBT wheat, a trader said. It seemed as though new capital continued to enter into the markets, he said.

 

"I would say it's part of this rush-to-commodities flow," an analyst said.

 

Prices rose even though the International Grains Council raised its 2009-10 world wheat output estimate by 0.2% from April to 652 million tonnes. The council said the forecast rose due to "significant upward revisions" for China and Russia. World wheat ending stocks in 2009-10 are expected to rise 5.7% from last year to 167 million tonnes, it said.

 

 

Minneapolis Grain Exchange

 

MGE wheat finished higher but trailed CBOT and KCBT wheat during the day session. Profit-taking kept a lid on prices after MGE wheat led recent rallies amid worries about delayed U.S. hard red spring wheat plantings, a trader said.

 

There is still a "major supply event going on" in the northern U.S. Plains as farmers work to get the rest of the spring wheat crop in the ground, an analyst said. Cool, wet weather has delayed seeding.

 

MGE July wheat ended up 27 cents on the week and US$1.13 3/4 on the month.