July 7, 2006

 

US Wheat Review on Thursday: Mixed finish; minneapolis grain exchange near lows

 

 

U.S. wheat futures closed mixed Thursday, as Minneapolis firmed but ended near session lows, while Kansas City fell on conflicting weather forecasts and technical weakness.

 

Chicago wheat closed higher on light speculative buying and benefited from rallies in corn and wheat.

 

Basis September contracts, Chicago Board of Trade wheat rose 2 1/2 cents to US$4.07 1/4, Kansas City Board of Trade fell 3 3/4 cents to US$5.18 1/2 and the Minneapolis Grain Exchange added 1 3/4 cents to US$5.14 1/2.

 

Hot, dry weather on the northern Plains and its adverse effect on the hard red spring crop continue to be the markets' focus, sources said.

 

"There are some forecasts for hotter, drier conditions to come back into the Great Plains, which would include some of the spring wheat areas," said Jack Scoville, analyst and vice president of Price Futures Group in Chicago.

 

The latest Drought Monitor map shows moderate drought spreading into North Dakota, southeastern Montana, Wyoming and northeastern Minnesota. Severe to extreme drought is seen from Nebraska into the Dakotas.

 

Minimal showers are seen for the northern Plains through the middle of next week, as above-normal temperatures move back into these areas, DTN said.

 

In addition to the weather influence, more speculative money has been flowing into the Chicago wheat pits recently, supporting the market, Scoville said.

 

Meanwhile, export inspections were pegged at 14 million bushels in the week to June 29, the U.S. Department of Agriculture reported, within expectations but down from 18 million the previous week as high prices pressured demand.

 

Weekly export sales - delayed because of the Independence Day holiday - are scheduled to be released Friday at 8:30 a.m. EDT.

 

At the CBOT, Man Financial sold a net 100 Sep and Fimat sold 200 Sep, while O'Connor bought 200 Dec, and Prudential Financial and Rand Financial each bought 100 Sep. Funds bought a net 300 contracts as of 1:30 p.m. EDT.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat closed lower on conflicting weather forecasts: one that showed the potential for scattered rains across the Great Plains this weekend and other showing hot, drier conditions, a trader said.

 

The Kansas hard red winter harvest is essentially finished, and farmers continue to cut soft winter wheat in the Midwest.

 

The eastern Midwest is expected to continue its hot, dry weather pattern through the start of next week, DTN said.

 

The failure of September to take out Wednesday's US$5.24 high also sparked technical sales and pressured the market into the close, the trader said.

 

ADM was a featured seller of 800 September contracts in early trade, Fimat sold a net 200 September, FC Stonnee sold 300 September and J.P. Morgan bought 200 September.

 

General Mills was active on the spread, trading 400 December/September contracts at 11 to 11 1/2 cents.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

September hard red spring wheat at the MGE reached a new contract high of US$5.24 a bushel, but sold off into the close as traders booked profits. The contract ended with a 1 3/4 cent gain, but was near session lows.

 

Nevertheless, a bullish weather scenario remains in the HRS market with drought continuing to spread on the northern Plains, likely reducing the amount of spring wheat available to help fill the void left from a short winter wheat crop, a trader said.

 

Hard red spring wheat can be used in place of hard red winter when HRW supplies are short, as they are this year, and the market has turned bullish now that drought is threatening to cut into the HRS crop.