May 31, 2008

 

US Wheat Review on Friday: Closes firmer on spillover support

 

 

Spillover support from firm neighboring markets lifted U.S. wheat futures Friday.

 

Chicago Board of Trade July wheat closed 18 cents higher at US$7.61 1/2 per bushel, up 9 cents on the week. Kansas City Board of Trade July wheat rose 8 cents US$8.02, up 4 1/4 cents on the week. Minneapolis Grain Exchange jumped 10 1/2 cents to US$10.55, up 25 cents on the week.

 

Solid gains in CBOT corn and soybeans pulled wheat higher, traders said. Wheat also saw a bit of a technical rebound after the CBOT July contract Thursday closed at its lowest price since late November, traders said.

 

Forecasts for dry weather in Australia and for heat in the U.S. southern Plains added support, said Mike Zuzolo, analyst for Risk Management Commodities. Hotter temperatures in the Plains during the next five days should increase stress to wheat, including in Colorado, portions of western Kansas, and the Oklahoma-Texas Panhandle, according to DTN Meteorlogix.

 

In Australia, some rain is in store for the wheat areas in Queensland, Meteorlogix said. However, wheat regions in New South Wales, Victoria and South Australia should stay mostly dry during the next week.

 

"I think the trade is a bit nervous about Australia's forecast for dry weather for the next five or six days," Zuzolo said.

 

Weekly U.S. wheat export sales were -340,700 metric tonnes for delivery in 2007-08 and 904,600 tonnes for delivery in 2008-09, according to the U.S. Department of Agriculture. The wheat marketing year starts June 1, and it was expected that old-crop sales would roll over to the new-crop year, traders said.

 

Moving forward, Middle East importers might become more aggressive in booking U.S. wheat if Australia stays dry and temperatures in the U.S. Plains heat up, Zuzolo said.

 

 

Kansas City Board of Trade

 

Gains in CBOT corn and soybeans and in crude oil boosted KCBT wheat futures, a floor trader said. A late round of market-on-close buying was associated with month-end positioning-squaring, he added.

 

The July/September spread is expected to widen in the coming weeks as positions roll out of the nearby contract, the trader said. KCBT September wheat closed up 10 cents at US$8.16.

 

 

Minneapolis Grain Exchange

 

Floor activity was quiet at the MGE, a floor trader said. The market was a follower of CBOT wheat, corn and soybeans, he said.

 

The trade will be interested to see condition ratings and development progress for spring wheat in the USDA's weekly crop progress report Monday afternoon, an analyst said. The USDA rated 79% of the crop as good to excellent as of May 25 and said the crop was 76% emerged.