June 23, 2007

 

US Wheat Review on Friday: Finishes lower on advancing harvest

 

 

U.S. wheat futures finished sharply lower Friday as the advancing harvest and profit-taking weighed on prices, floor traders and analysts said.

 

Chicago Board of Trade July wheat closed 13 3/4 cents lower at US$5.92 1/4 per bushel. Kansas City Board of Trade July ended down 16 3/4 cents at US$5.70 3/4, and Minneapolis Grain Exchange July wheat stumbled 5 1/4 cents to US$6.00.

 

CBOT July wheat ended down 14 1/4 cents on the week and closed at its lowest price since June 19. The contract traded in a range of US$5.87 to US$6.07 during the day session.

 

Drier weather in the U.S. Southern Plains was bearish for prices as producers are pushing ahead with the hard red winter wheat harvest after weeks of delays from excessive precipitation, traders said. Soft red winter wheat harvest in the Midwest should chug along, as well, they added.

 

HRW wheat is used to make bread, while SRW wheat is baked into pastries and snack foods.

 

End-of-the-week profit-taking pressured wheat after hard rallies last week, a CBOT floor broker said. The market still had some room to consolidate, he said.

 

Commodity funds sold an estimated 4,000 contracts at CBOT. In pit trades, Fimat bought 600 September, RJ O'Brien bought 300 September and JP Morgan sold 500 September.

 

CBOT corn and soybeans also ended sharply lower Friday on heavy fund and speculative selling in the face of rainfall in dry growing areas of the Midwest, creating a negative tone for wheat, an analyst said. Euronext.liffe wheat futures finished lower Friday in a corrective setback from recent highs and spillover weakness from the CBOT grains markets.

 

Moisture in drought-stricken areas of Ukraine looked to be another negative for wheat, although damage to the wheat crop has already been done, an analyst said.

 

A few significant thundershowers occurred in the country but with low coverage, DTN Meteorlogix said. A more widespread rain is needed for dry growing areas in the Black Sea region. The outlook for east Ukraine and North Caucasus Russia calls for near to below normal rainfall during the next week, the weather firm said.

 

Kansas City Board of Trade

 

KCBT July wheat closed 25 1/2 cents lower on the week. Prices slipped Friday on the advancing harvest and expectations that hard red winter wheat cutting will progress considerably next week, traders said.

 

The DTN Meteorlogix forecast calls for Western Kansas to have warmer, drier weather during the weekend and hotter temperatures with little rain next week. Eastern growing areas during the next seven days won't be as wet as they have been recently, but some harvest-disrupting rainfall cannot be ruled out, the weather firm said.

 

Kansas' harvest has been varied so far, a KCBT floor trader said. Near Atwood, in far northwest Kansas, there are reports of 30-35 bushel per acre yields and protein levels that are "not so good," he said. Near Garden City, a grower said fields were yielding 80 bushels an acre, the trader added.

 

"It's still all over the place," the trader said about yield results, "but certainly they're going to get more cut" next week.

 

The U.S. Department of Agriculture will release its updated crop progress report Monday. As of June 17, the agency said harvest was 11% complete, compared to 34% at the same time last year and a five-year average of 20%.

 

Monday's report may not show much harvest progress but the week after that should indicate cutting is moving along at a good pace, the KCBT floor trader said.

 

Minneapolis Grain Exchange

 

MGE July wheat closed up 13 3/4 cents on the week. Prices stumbled Friday on spillover pressure from losses at CBOT and KCBT, a floor trader said. There was also some profit-taking before the weekend after contracts finished stronger Thursday, he added.

 

The strong condition of the spring wheat crop is bearish for prices, analysts said. The USDA rated 85% of the U.S. spring wheat crop in good-to-excellent condition as of June 17, up four percentage points from the previous week.

 

Still, there is underlying support for MGE wheat from ideas that the quality of the HRW wheat crop has deteriorated, the trader added.

 

Hot weather is expected to develop in the U.S. Northern Plains during the next few days, with widespread temperatures in the 90s Fahrenheit on Saturday and Sunday, according to T-Storm Weather. Heat should continue through Monday before cooler weather then sets in, with a round of thunderstorms possible due to the transition, the weather firm said in a forecast.