August 25, 2007

 

US Wheat Review on Friday: Pushes higher on demand ideas

 

 

U.S. wheat futures ended mostly higher Friday, shaking off early weakness amid expectations that strong demand will continue, analysts said.

 

Chicago Board of Trade September wheat closed 3 1/4 cents higher at US$7.25 3/4 per bushel, up 53 3/4 cents on the week. CBOT December wheat settled 3 cents higher at US$7.42 per bushel, up 53 1/2 cents on the week.

 

Kansas City Board of Trade September wheat finished 9 cents higher at US$6.82 3/4, up 32 1/4 cents on the week. KCBT December wheat rose 9 1/2 cents to US$6.98, up 34 cents on the week.

 

Minneapolis Grain Exchange September wheat closed up 1/4 cent at US$6.70 3/4, up 18 1/2 cents on the week. MGE December wheat finished 1 1/2 cents higher at US$6.83, up 25 1/2 cents on the week.

 

Trading was quiet and choppy for most of the day session, with gains building just before the close.

 

Many market participants sat on the sidelines following rallies earlier in the week, analysts said. Traders did not want to push the market too high after prices climbed to fresh 11-year and all-time highs this week, they said.

 

CBOT December wheat on Thursday set a new record high of US$7.54, exceeding the previous high of US$7.50.

 

"It's a little bit nervous out there," said Larry Glenn, owner of Glenn Commodities in Wichita, Kan.

 

But there are bullish expectations the pace of export sales will remain solid and support prices in the near term, Glenn said. Morocco, Iraq and other importers may still knock of the U.S.'s door looking for wheat, he said.

 

"There are still a fair amount of countries out there that could still be buying," Glenn said.

 

International weather going into the weekend show little change from the patterns of the past week, according to the DTN Meteorlogix forecast. Western and central European wheat areas continue to be wet, which is hindering late harvest along with the seeding of the next winter wheat crop, the weather firm said.

 

Southeast Europe and Ukraine are hot and dry, with temperatures approaching 100 Fahrenheit for daytime highs, Meteorlogix said. Crop losses have already been tallied and soil moisture is low for seeding of the next winter wheat crop, the firm said.

 

Australia and Argentina wheat areas are dry as well, with little rain expected in the next week, according to Meteorlogix.

 

 

Kansas City Board of Trade

 

KCBT wheat futures led the upside. The market found some support from news that private exporters reported to export sales of 100,000 metric tonnes of hard red winter wheat for delivery to Cuba, Glenn said. The sales were for the 2007-2008 marketing year, which began June 1.

 

There are expectations the U.S. will make more sales of HRW wheat, traded at the KCBT, in the near future following a steady stream of soft red winter wheat sales to Egypt, Glenn said. SRW wheat is traded at the CBOT.

 

"Every once and a blue moon, it seems like we've had some sales to Cuba," a KCBT floor broker said.

 

It also looked as those traders were trying to pick a top on the KCBT/CBOT spread, the broker said. Technical buying of KCBT and selling of CBOT seemed to come in to narrow the spread, he said.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures were seen as a follower of the CBOT, a MGE floor trader said. Prices stayed near unchanged as CBOT wheat was choppy earlier in the day session, he said.

 

The market "was worn out" after the week's rallies, the trader said.

 

Spring wheat harvest in the U.S. Northern Plains and Canadian Prairie is wrapping up. There are generally favorable conditions ahead for any remaining cutting, Meteorlogix said. Some hot weather will develop during the next week in the region, but it won't cause many harvest problems, the firm said.