US Wheat Review on Thursday: Rises on short-covering before USDA data

 

 

Short-covering and technical buying pushed up U.S. wheat futures Thursday as some optimism emerged about export demand.

 

Chicago Board of Trade September wheat gained 5 cents to close at US$5.22 1/4 a bushel. Kansas City Board of Trade September wheat jumped 5 cents to US$5.51 1/2, and Minneapolis Grain Exchange September wheat rose 3 cents to US$6.07 1/2.

 

The markets rebounded after falling hard during the past five weeks. Commodity funds bought an estimated 3,000 contracts at the CBOT.

 

CBOT September wheat in open outcry trading set a fresh weekly high of US$5.29 before trimming gains. The previous open outcry high for the week was US$5.27 1/2.

 

There was some positioning ahead of U.S. Department of Agriculture supply/demand and production reports due out at 8:30 a.m. EDT Friday, a CBOT trader said. The average of analysts' estimates for all-wheat production is 2.107 billion bushels, compared to the USDA's June estimate of 2.016 billion and 2008 production of 2.5 billion, according to a Dow Jones Newswires survey of 11 analysts.

 

The increase in total wheat production should translate into larger U.S. 2009-10 wheat ending stocks, analysts said. The average of analysts' estimates for carryout is 693 million bushels, up from the USDA's June estimate of 647 million, according to a survey of 14 analysts.

 

 

Kansas City Board of Trade

 

KCBT wheat rose in a continued recovery from recent losses, traders said. Outside markets, including a weak dollar and strong crude oil, were seen as supportive.

 

Demand has been lackluster lately, but weekly U.S. wheat export sales of 584,200 tonnes were above trade expectations and seen as solid. There are ideas U.S. wheat has become more competitive on the world export market following the recent price decline, traders said.

 

 

Minneapolis Grain Exchange

 

MGE wheat trailed other markets amid expectations that wet weather will favor developing spring wheat in the northern U.S. Plains, a trader said. Weekly sales of U.S. hard red spring wheat of 218,500 were "excellent," an analyst said.

 

Traders are waiting for the USDA to issue its first estimate on spring wheat production Friday. There are questions about spring wheat production prospects after cool, wet weather delayed planting this spring.

 

The average of analysts' estimates for 2009-10 production of spring wheat other than durum is 505 million bushels, compared to 547 million last year, according to a survey of seven analysts. The USDA in June surprised some traders by pegging other spring wheat plantings at 13.772 million acres, above the average trade estimate of 13.102 million and up from USDA's March estimate of 13.304 million.