US Wheat Review on Thursday: Slips on rising production, stocks ideas

 

 

Expectations that the government Friday will raise its forecasts for U.S. wheat production and ending stocks weighed on U.S. wheat futures Thursday, analysts said.

 

Chicago Board of Trade September wheat fell 7 3/4 cents to US$8.18 per bushel. Kansas City Board of Trade September wheat dropped 4 cents to US$8.48 1/2, and Minneapolis Grain Exchange September wheat lost 1 1/4 cents to US$8.81 3/4.

 

The markets saw late selling pressure after trading narrowly mixed around mid-session. Strong winter wheat yields are encouraging ideas the U.S. Department of Agriculture will hike projections for 2008-09 U.S. wheat production in a crop report due out at 8:30 a.m. EDT Friday, said Larry Glenn, broker for Frontier Ag.

 

The average of analysts' estimates for all winter wheat production is 1.852 billion bushels, up from the USDA's June estimate of 1.817 billion, according to a Dow Jones Newswires survey of 11 analysts. The average of analysts' estimates is 1.037 billion for hard red winter wheat, compared to 1.030 billion in June, and 592 million for soft red winter wheat, compared to 572 million in June.

 

"I think overall yields are going to be pretty good," Glenn said. "Where there was good wheat, it was good wheat."

 

The average of analysts' estimates for 2008-09 U.S. wheat ending stocks was 538 million bushels, up from the USDA's June estimate of 487 million, according to a survey of 12 analysts. The range of analysts' estimates was 470 million to 629 million.

 

Weakness in the neighboring CBOT corn market added to the bearish tonnee in wheat, traders said. Wheat has been watching corn for direction, as the grains are both used for animal feed.

 

 

Kansas City Board of Trade

 

KCBT wheat futures pulled back late after temporarily rising during the session. Some inter-market spreading - buying of KCBT wheat and selling CBOT wheat - temporarily gave the market a boost, a floor trader said.

 

Harvest pressure continued to hang over the market, an analyst said. The central and southern Plains should see hot weather for the next day or two, but a strong cool front will chase away the heat this weekend, and some t-storms are probable across all areas through early next week, according to T-Storm Weather.

 

Weekly U.S. wheat export sales of 617,100 metric tonnes were slightly above trade expectations, which ranged from 400,000 to 600,000 tonnes. Of the sales, 268,300 tonnes were hard red winter wheat and 200,500 tonnes were soft red winter wheat, according to the USDA.

 

Sales "were good," Glenn said. "Almost half of it was hard red winter wheat. (Buyers) still need good quality wheat."

 

 

Minneapolis Grain Exchange

 

MGE wheat futures stumbled late after trading unchanged near mid-session. Pressure from weakness in CBOT wheat and corn weighed on the market, along with a lack of end user buying, a trader said.

 

Traders were looking ahead to the release of the USDA reports Friday. The average of analysts' pre-report estimates was 537 million for other spring wheat production, up from 479 million in 2007, and 95 million for durum, up from 72 million last year.