June 8, 2007

 

US Wheat Review on Thursday: Bounces higher amid gains in CBOT corn

 

 

U.S. wheat futures bounced higher Thursday on spillover strength from the neighboring corn market and with underlying support from concerns about tight global ending stocks, market analysts and floor traders said.

 

Chicago Board of Trade July wheat ended 4 3/4 cents higher at US$5.24 1/2 per bushel. Kansas City Board of Trade July wheat rose 9 cents to US$5.12 1/2, and Minneapolis Grain Exchange July wheat finished 4 cents higher at US$5.30 1/4.

 

Solid advances in CBOT corn appeared to be the catalyst for wheat's move higher, analysts said. Lingering background support from forecasts for historically tight ending stocks was seen, although fears about crop loss in Ukraine due to drought are now "old news," they added.

 

There also are hopes that the U.S. will be able to pencil in some export sales to India, an analyst said. India said Thursday it will import 5 million tonnes of wheat between August and December. In announcing the plan, the agriculture minister noted India wanted the U.S. to submit bids and said talks between the countries about wheat trade were ongoing.

 

The news may have offered a bit of a boost to prices, although the U.S. said it hasn't been able to reach an agreement on market access for its wheat into India yet, noted Chad Henderson, analyst with Prime Agricultural Consultants. The countries recently held bilateral talks in Washington, D.C., and Portland, Ore., to find out ways to facilitate wheat trade between the nations.

 

Separately, India's food secretary said a tender issued by India's MMTC Ltd. to import 50,000 tonnes of wheat is likely to cater to private buyers as the company isn't meant to make purchases on behalf of the government. MMTC, a government-run trading company that purchases wheat on behalf of local flour, bread and biscuit manufacturers, plans to import wheat for delivery in July or August 2007.

 

Weekly export sales of new-crop U.S. wheat were within trade expectations but were still seen as solid, an analyst said. The U.S. Department of Agriculture reported sales for the week ended May 31 totaled 347,700 metric tonnes, while analysts' estimates ranged from 100,000 to 450,000 tonnes.

 

In other news, significant rain, with totals from one-half inch to more than one inch, benefited the northern half of New South Wales' in Australia, T-Storm Weather said in a daily forecast. The moisture means that almost all, if not all, of the country's eastern wheat belt received significant rainfall during the past few weeks, the forecast stated.

 

"There's really no threatening weather in Australia," Henderson said.

 

Looking ahead, the trade is waiting for the USDA to release its June supply and demand report at 8:30 a.m. EDT Monday, traders said. On Friday, "the whole (trade's) focus will shift to what that report will be like," Henderson said.

 

Of 13 analysts surveyed by Dow Jones Newswires about their expectations for the USDA's all winter wheat production estimate, the average guess was 1.637 billion bushels, up from the USDA's May estimate of 1.616 billion. The average guess for soft red winter wheat production was 350 million bushels, up from the USDA's May estimate of 347 million, according to a poll of 12 analysts.

 

Of 15 analysts surveyed about wheat carryout, the average guess was 412 million bushels for old-crop stocks, which is the same as the USDA's May estimate, and 490 million for new crop stocks, up from the USDA's May estimate of 469 million.

  

 

Kansas City Board of Trade

 

KCBT wheat futures were carried higher by gains in CBOT corn, a floor trader said. The trade is keeping its ears open for news about yields in the U.S. Southern Plains, he added.

 

Reports so far indicate a variety of yields depending on the impact of a severe freeze Easter weekend, the trader said.

 

For the June supply/demand report, hard red winter wheat production was put at 1.056 billion bushels, up from the USDA's May estimate of 1.028 billion. The average guess for white winter wheat production was 237 million bushels, down from the USDA's May estimate of 241 million, according to a survey of 11 analysts.

  

 

Minneapolis Grain Exchange

 

MGE wheat futures found some support from forecasts for more precipitation in spring wheat areas during the next six to 10 days, an analyst said. The area has seen enough rain already in the Red River Valley, he added.

 

Spring wheat areas of the Northern Plains had heavy rainfall for the region Wednesday, and more rain is on the way Thursday into Friday, according to DTN Meteorlogix. Rainfall will top three inches in many areas of Montana and North Dakota, and the heavy rain may cause some damage to spring wheat, the weather firm said.