June 5, 2008

 

US Wheat Review on Wednesday: Ends mostly up on firm neighboring markets

 

 

Spillover strength from firm Chicago Board of Trade corn and soybean futures pushed U.S. wheat futures mostly higher Wednesday.

 

CBOT July wheat rose 2 1/2 cents to US$7.53 per bushel. Kansas City Board of Trade July wheat jumped 2 cents to US$7.90, and Minneapolis Grain Exchange July wheat tumbled 35 cents to US$9.40.

 

Wheat rose on borrowed strength from the neighboring markets and in a rebound from sharp recent setbacks, traders said. Wheat recently "took it on the chin," with the CBOT July contract last week falling to its lowest price since November, an analyst said.

 

"I think the row crops probably held it up," Jason Ward, analyst for Northstar Commodities, said about wheat. "Otherwise, it would have been down more."

 

Despite the session's gains, fundamentals for wheat look bearish. Expectations for a record world crop in 2008-09, reports of solid early U.S. harvest results and rains in Australia have been hanging over the markets, a CBOT floor analyst said.

 

There was little reaction to private analytical firm Informa Economics pegging 2008 U.S. winter wheat production at 1.848 billion bushels, above the U.S. Department of Agriculture's May estimate of 1.778 billion, traders said. The firm last month put the crop at 1.747 billion.

 

 

Kansas City Board of Trade

 

KCBT July wheat finished modestly higher as the market rebounded from steep declines Tuesday, a floor trader said. The market kept an eye on firm CBOT wheat, corn and soy.

 

Stress to wheat should increase in the driest areas of southeast Colorado, extreme southwest Kansas and the west Texas region due to hot temperatures and a lack of rain, DTN Meteorlogix said. However, harvest conditions will be favorable for ripening hard red winter wheat in the rest of the southern Plains, the private weather firm said.

 

 

Minneapolis Grain Exchange

 

MGE wheat bucked the higher trend and finished in negative territory. Bear spreading and flat-price selling dragged MGE July wheat sharply lower, traders said.

 

Prudential was noted as selling MGE July wheat and buying MGE December wheat, and as a flat-price seller of about 250 July contracts at the close. Locals also pushed down the nearby July contract, a trader said.

 

There was "nobody really standing in there to defend the July," the trader said.

 

The daily trading limit for MGE wheat will remain expanded to 90 cents Thursday. The limit was temporarily widened starting Wednesday because MGE July wheat Tuesday closed limit down, or 60 cents lower. The wheat limit will stay 60 cents at the CBOT and KCBT.