July 11, 2007

 

US Wheat Review on Tuesday: Futures end mixed after early gains on egypt

 

 

U.S. wheat futures ended mixed Tuesday as the markets ran out of steam after opening higher on export news, traders and analysts said.

 

Chicago Board of Trade September wheat ended up 2 1/4 cents at US$6.01 3/4 per bushel, Kansas City Board of Trade September wheat slipped 3/4 cent to US$5.90 and Minneapolis Grain Exchange September wheat ended down 1/4 cent at US$6.09 3/4.

 

A sale of 60,000 metric tonnes of U.S. soft red wheat to Egypt's state-owned General Authority for Supply Commodities, or GASC, gave wheat prices early strength, traders said. GASC also bought 60,000 tonnes from Russia.

 

The news, however, could not sustain strong gains in the markets, traders said. It was not seen as a "big enough surprise," one trader said.

 

In general, it is difficult to keep wheat above US$6, traders said. Market participants buying corn and selling wheat in spread trades also were "tempering some enthusiasm in wheat," said Jason Britt, broker and analyst at Central State Commodities.

 

Looking forward, there will likely be positioning Wednesday before the U.S. Department of Agriculture releases its July supply/demand report Thursday, Britt said. The report is due out at 8:30 a.m. ET.

 

The USDA is expected to lower its estimate for all winter wheat production in the July supply and demand report after damaging rains fell in the Southern Plains, analysts said. The average trade estimate for 2007-08 all winter wheat production is 1.584 billion bushels, down from the USDA's June estimate of 1.610 billion, according to a Dow Jones Newswires survey of 11 analysts. The average analyst estimate for HRW wheat production is 995 million, down from the USDA's June estimate of 1.032 billion.

 

The average analyst estimate for soft red winter wheat production is 352 million, up slightly from the USDA's June estimate of 341 million. The USDA may increase its estimate for SRW production after raising its projection for SRW wheat acres in the June acreage report, an analyst said.

 

The average analyst estimate for spring wheat production is 495 million, down from 509 million in 2006. The average analyst estimate for durum wheat production is 77 million, up from 53 million in 2006. The average analyst estimate for all wheat production is 2.156 million, up from 1.812 million in 2006.

 

In other news, Argentina's wheat areas had temperatures drop into the 30s and 40s Fahrenheit on Monday, which is quite cold for the country, DTN Meteorlogix said. Temperatures will plummet to the teens and even single digits Tuesday night and Wednesday, the weather firm said.

 

"This could do some damage to wheat in the south, where stands are thinner because of low soil moisture during planting," Meteorlogix said in a forecast.

 

Nearly all of Australia's wheat areas have seen less than 60% of their normal rainfall since the start of the month, and some areas have seen less than 40%, Cropcast said in a forecast. Crops are germinating and need moisture, but they won't get much help during the next five days, according to the private weather firm. The areas that have been the driest this month, including Queensland and northern New South Wales, could remain dry through the next two weeks, Cropcast said.

 

 

Kansas City Board of Trade

 

More unfavorable heavy rain affected the southeastern-third of Kansas along with central and eastern Oklahoma overnight, T-Storm Weather said. Flash flood warnings were activated along the eastern edge of Oklahoma's concentrated production region, the weather firm reported. More wetness appears to be on the way, with a thunderstorm pattern possible Wednesday and Thursday, according to the T-Storm forecast.

 

The USDA, in its weekly crop progress report, said 58% of the winter wheat crop was harvested as of Sunday, down from 70% at the same time last year and the five-year average of 65%. In Oklahoma, 69% of the crop was harvested as of Sunday, compared to 100% last year and the five-year average of 99%.

 

The markets have already factored in the harvest delays, but there is growing concern that the remaining crop won't be harvested at all, an analyst said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures slipped following a light-volume, choppy session, a floor trader said. Prices opened higher on the Egyptian sale but lost steam through the day, without enough fresh, bullish inputs to maintain gains, he said.

 

The USDA rated 78% of the spring wheat crop in good-to-excellent condition as of Sunday, down one percentage point from the previous week. The decrease was expected and did not impact trading, an analyst said. The crop's development was seen as normal to ahead of schedule at 82% headed, down from 84% last year but up from the five-year average of 70%.