August 14, 2007

 

US Wheat Review on Monday: Ends mostly higher on demand expectations

 

 

Expectations for strong demand and speculative buying carried U.S. wheat futures mostly higher Monday, analysts said.

 

Chicago Board of Trade September wheat slipped 1/2 cent to US$6.66 1/2 per bushel, and CBOT December wheat rose 6 cents to US$6.90 1/2. Kansas City Board of Trade September wheat ended up 1/4 cent at US$6.54 3/4, and KCBT December wheat finished up 5 cents at US$6.74. Minneapolis Grain Exchange September wheat fell 3 cents to US$6.61, and MGE December wheat closed up 2 1/4 cents at US$6.65 3/4.

 

There was little fresh news out for the markets to trade on, but fundamental support for wheat remains strong amid tight global stocks, traders said.

 

Russia sold 115,000 metric tonnes of wheat to Egypt during the weekend, which was seen as a mixed bag for the markets, said Brian Hoops, president of Midwest Market Solutions in Yanktonne, S.D. The sale was bearish because the U.S. didn't win any of the business but friendly to prices because it means there is less grain on the world market, Hoops said.

 

After the close, Egypt issued a new tender for 55,000-60,000 tonnes of wheat. Egypt typically tenders for about that amount and then buys more.

 

The U.S. remains a primary source for high-quality milling wheat amid global production problems, analysts said. With that in mind, the trade will continue to look for fresh demand news, Hoops said.

 

"That's the only thing that's driving prices," he said.

 

Trading was choppy and slow during much of the day session Monday. The September/December spread was a feature, traders said.

 

Non-commercial speculative funds increased long CBOT wheat futures and options positions by 5,297 lots and cut shorts by 401 lots as of Aug. 7, the Commodity Futures Trading Commission said in a supplemental report. The funds were net long 7,156 contracts, according to the CFTC.

 

Paris- and London-based Liffe wheat futures finished higher, but off early session highs as upward momentum waned amid a lack of fresh bullish news. All eyes are on U.K. weather, which could include heavy rain for uncut wheat areas over the next two days.

 

Europe's wheat harvest remains delayed and is losing quality because of rainfall, according to DTN Meteorlogix. Progress will remain slow due to moderate to heavy thunderstorms from south and east Germany through northeast and east-central Europe during the weekend, the weather firm said.

 

"This is unfavorable for maturing wheat, and delays and disrupts the harvest," the firm said.

 

In Australia, meanwhile, more rain is needed for dry wheat areas of New South Wales and southern Queensland. Argentina's southern wheat belt is also dry.

 

 

Kansas City Board of Trade

 

Russia's wheat sale to Egypt was seen as bearish as it represented the third consecutive time Egypt has snubbed U.S. wheat in a tender, a KCBT floor trader said. There was also some early follow-through weakness from a lower close Friday, he said.

 

However, prices rebounded late with the move higher at the CBOT, the trader said. There remains good support on breaks, he said.

 

Speculative funds boosted KCBT wheat longs by 1,944 lots and shorts by 1,529 lots as of Aug. 7, the CFTC said. They were net long 40,855 contracts.

 

 

Minneapolis Grain Exchange

 

Spring wheat cutting also is progressing in the U.S. Northern Plains with generally strong results, a MGE floor trader said.

 

Northern Plains and Canadian Prairie wheat areas have a generally favorable weather pattern for ripening and harvest, according the Meteorlogix. During the next 10 days, generally warm and dry weather will prevail in this region.

 

Speculative funds increased MGE wheat longs by 1,775 lots, decreased shorts by 2 lots, and were net long 14,437 contracts, according to the CFTC.