July 14, 2007

 

US Wheat Review on Friday: Ends mostly lower, looking at weather

 

 

A lack of fresh news and conflicting market sentiments about forecasts for hot, dry weather drove U.S. wheat futures mostly lower Friday, analysts said.

 

Chicago Board of Trade September wheat closed down 3/4 cent at US$6.20 3/4, up 10 3/4 cents on the week. CBOT December wheat slipped 1 1/2 cents to US$6.35 1/4, up 12 3/4 cents on the week.

 

Kansas City Board of Trade September wheat finished the day session 2 cents lower at US$6.09, up 6 1/2 cents on the week. KCBT December wheat ended down 1/2 cent at US$6.27 1/4, up 10 1/4 cents on the week.

 

Minneapolis Grain Exchange September wheat ended down 2 cents at US$6.30, up 10 3/4 cents on the week. MGE December wheat finished down 3/4 cent at US$6.39 1/4, up 11 1/4 cents on the week.

 

Bulls didn't have many new inputs to feed on, so prices took a bit of a "breather" before the weekend, CBOT floor traders said. In the absence of fresh news, market participants focused on the weather and forecasts for sweltering temperatures next week, they said.

 

Weather models call for a "major heat wave" to begin across the central U.S., T-Storm Weather said. The extent of the "heat dome" would extend from southern Canada into the Gulf of Mexico, the firm said.

 

If the models' predictions come true, "this would be one of the larger and more expansive heat waves in many years," T-Storm said. "Rain chances would be near non-existent if the model is correct for most of the Corn Belt and Central/Northern Plains."

 

Trading was choppy as the forecasts were seen as bearish for winter wheat and potentially bullish for spring wheat, said Tim Hannagan, an analyst for Alaron in Chicago.

 

"We're basically seeing a tug of war between weather harming the spring wheat, but the weather also helping encourage the end of the winter wheat harvest," Hannagan said.

 

Paris and London wheat futures traded on Liffe finished narrowly mixed Friday as harvest nearby weather improved. Hot, dry and windy weather forecast for the next three days is expected to kickstart some wheat cutting in France and Germany after rain delays.

 

In other news, drought continues to build in Argentine wheat areas, hindering germination of newly seeded plants, Cropcast said. The country's primary growing areas have seen "extremely dry" conditions during the past 60 days, with many spots picking up less than 20% of normal rainfall during that period, according to the private weather firm. Most areas are forecast to pick up well below 0.5 inch during the next 10 days.

 

 

Kansas City Board of Trade

 

Volume was relatively low at the KCBT, a floor trader said. It looked like "people were just mailing it in for the week," he said.

 

Floor chatter indicated Iraq had tendered for hard wheat, although the markets didn't seem to react much to the speculation.

 

"Iraq is in here checking prices every day" if you follow chatter, a trader said. "The markets don't care about Iraq."

 

 

Minneapolis Grain Exchange

 

MGE September and December wheat stumbled, but deferred-month contracts rose in low-volume trading, a floor trader said.

 

Northern Plains and Canadian Prairie spring wheat areas will have a hot and dry pattern from the western Dakotas westward during at least the next seven to 10 days, Meteorlogix said. The heat wave will add stress to the crops, the weather firm said.