July 6, 2007
US Wheat Review on Thursday: Solid demand pushes prices sharply higher
U.S. wheat futures climbed sharply higher Thursday as strong export demand gave prices a boost, traders said.
Chicago Board of Trade September wheat ended 21 cents higher at US$6.04 per bushel, and CBOT December wheat finished up 19 cents at US$6.16. Kansas City Board of Trade September wheat rose 14 cents to US$5.99, and KCBT December wheat closed up 12 1/2 cents at US$6.11. Minneapolis Grain Exchange September wheat settled 12 3/4 cents higher at US$6.15, and MGE December wheat ended 12 cents higher at US$6.21.
Commodity funds bought an estimated 2,000 contracts at the CBOT. In pit trades, Tenco bought 500 September and spread 2,000 September/December.
Solid export demand, including a sale to Egypt, helped push prices to double-digit gains, traders said. While U.S. markets were closed Wednesday in observance of Independence Day, Egypt's state-owned General Authority for Supply Commodities, or GASC, said it bought 115,000 metric tonnes of U.S. soft red wheat. GASC also bought 60,000 tonnes of Russian wheat.
The U.S. Department of Agriculture on Thursday confirmed private sales of 100,000 tonnes of U.S. hard red winter wheat for delivery to Iraq in the 2007-08 marketing year. Jordan tendered for 100,000 tonnes of hard wheat of any origin.
Floor chatter that Syria may default on wheat export contracts added a "bullish tonnee" to wheat, a CBOT floor trader said. Syria may have to cancel contracts for 200,000 metric tonnes of durum and up to 550,000 tonnes of soft milling wheat due to the impact of unfavorable weather on domestic production, he said.
There are expectations that foreign countries will continue to come to the U.S. to buy wheat, an analyst said. Global ending stocks are pegged at a 30-year low, and there are production problems in key growing areas, including Ukraine and Europe.
Wet weather in European wheat-growing areas helped support prices as rain on mature winter grain crops can lower quality and yields, traders said. Most eyes are on the French crop as fields there are closest to maturity.
U.S. wheat futures slid Monday and Friday, and there was some speculation the market was due to a rebound, traders noted. Wheat prices firmed up Tuesday before ending mixed ahead of the Independence Day holiday.
In other news, deliveries posted against the CBOT July wheat futures contract were light at 20 contracts. Rosenthal Collins Group was the sole issuer. Bank of America Securities stopped 15 contracts. The last trade date assigned was June 27.
The USDA on Friday will release weekly export sales data, one day later than usual because of the July 4 holiday. Trade estimates for wheat exports range from 200,000-400,000 tonnes.
Kansas City Board of Trade
Harvest delays look as though they will continue in hard red winter wheat areas of the U.S. Southern Plains, although support from cutting problems has already been factored into the market, a trader said. The export news was the feature of the day, he said.
Southern Plains winter wheat areas have continued periodic showers to contend with during the next 10 days as the wheat harvest slowly struggles along, DTN Meteorlogix said Thursday in a forecast. A weather pattern that will bring generally favorable row crop conditions to the Midwest will also result in normal to below-normal temperatures and normal to above-normal rainfall in the Plains, according to the weather firm.
"This situation continues to be a negative factor for wheat production," Meteorlogix said.
Minneapolis Grain Exchange
MGE wheat futures were considered to be a follower of gains at the CBOT, a floor trader said. Market activity was not as heavy as usual with some traders taking the day off after Independence Day, he said.
Forecasts call for hotter, drier weather to move through spring wheat areas of the Northern Plains this weekend. The weather, however, should not hurt spring wheat as there is adequate subsoil moisture in place, industry members said.
There were no wheat deliveries scheduled for July 5 at the MGE.
