August 21, 2007

 

US Wheat Review on Monday: Ends mixed on late support from CBOT corn

 

 

U.S. wheat futures trimmed losses Monday and ended mixed amid spillover support from gains in the neighboring corn market, traders said.

 

Chicago Board of Trade September wheat rose 3 cents to US$6.75 per bushel, and CBOT December wheat closed up 2 1/2 cents at US$6.91 per.

 

Kansas City Board of Trade September wheat finished 1 cent lower at US$6.49 1/2, and KCBT December wheat ended up 1 cent at US$6.65. Minneapolis Grain Exchange September wheat fell 5 1/4 cents to US$6.47, and MGE December wheat closed down 2 1/2 cents at US$6.55.

 

Prices traded lower for much of the day session on a lack of unexpected news and a lack of trading interest, analysts said. Weekly U.S. wheat export inspections were almost double the highest analyst estimate, but the news failed to inspire a significant bounce.

 

The U.S. Department of Agriculture said inspections for the week ended Aug. 16 totaled 45.665 million bushels, while analysts had predicted inspections of 17 million to 24 million. For the marketing year to date, 234.025 million bushels have been inspected for export, compared to 173.460 million at the same time last marketing year.

 

"I think you've got a market that's looking for something you weren't anticipating," said Tom Leffler, owner of Leffler Commodities Augusta, Kan.

 

Prices bounced as the CBOT corn market firmed up going into the close, traders said. As far as fundamental factors for wheat, the trade will be looking for "new, unexpected demand" as the week progresses, Leffler said.

 

A senior government official in India said the country plans to issue a tender to import wheat shortly but said the quantity hadn't been decided yet because the rising cost of freight was a deterrent.

 

CBOT traders said they were wanted more concrete details before getting excited about the news from India and noted India has not been a buyer of U.S. wheat due to disagreements over quality requirements. India may hold off on buying if officials sense prices are going to go down, Leffler said.

 

In other news, Toepfer International released a monthly report Monday, which forecast 2007-08 E.U. soft wheat output at 113.3 million tonnes, down 2.7% from last year's crop. This was down slightly from Strategie Grains' projection of 114.1 million tonnes.

 

German farmers have harvested 40 million tonnes of grain to date, which is 8.7% less than in 2006's drought-hit harvest, the association said. Harvests in eastern and northern Germany have fallen more markedly than southern Germany, with Bavaria reporting an even higher harvest than in 2006.

 

Rains in Australia were bearish for U.S. wheat, a CBOT floor trader said. Widespread showers - ranging from 0.5 to 1.5 inches in portions of Queensland and New South Wales - during the past week have improved the condition of developing wheat in Eastern Australia, Cropcast said.

 

Soil moisture levels remain well below normal in the eastern areas, as most locations have received less than 60% of normal rainfall since the start of July, Cropcast noted. The next five days should bring a few more chances for showers to eastern areas, but conditions will turn drier again shortly thereafter, according to Cropcast.

 

Non-commercial speculative funds cut long and short CBOT wheat futures and options positions as of Aug. 14, according to a Commodity Futures Trading Commission supplemental report. The funds cut longs by 2,441 lots, shorts by 7,233 lots and were net long 11,948 contracts, the CFTC said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures consolidated for most of the day session but trimmed losses near the close on some spillover support from CBOT corn, a KCBT floor trader said. Volume was light.

 

There are expectations that U.S. growers will plant a good-sized hard red winter wheat crop this fall, Leffler said. Planting will begin in mid-September, he said. HRW wheat, used to make bread, is traded at the KCBT.

 

At the KCBT, speculative funds increased long positions by 153 lots, cut shorts by 90 lots and were net long 41,098 contracts as of Aug. 14, according to another CFTC supplemental report.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures led the downside earlier in the session amid pressure from farmer selling, a MGE floor trader said. U.S. spring wheat harvesting last week progressed at a steady pace, despite scattered precipitation, according to a new report from U.S. Wheat Associates.

 

The crop's average wheat protein content so far is 14.6%, up from 14.5% the previous week but down from last year's average of 15.2%, according to the report posted Aug. 17. Average test weight is 61.4 pounds per bushel, down from 61.5 pounds a week earlier but up from than last year's average of 60.4 pounds, the report said.

 

The USDA said spring wheat harvest was 51% complete as of Aug. 5 and rated 66% of the crop in good to excellent condition. The agency will release updated crop progress estimated at 4 p.m. EDT Monday.

 

At the MGE, speculative funds increased long positions by 1,474 lots, cut short positions by 252 lots, and were net long 16,163 contracts as of Aug. 14, the CFTC said.