US Wheat Review on Friday: Recovers after touching new contract lows

 

 

U.S. wheat futures rallied Friday in a technical recovery from recent losses after notching new contract lows.

 

Chicago Board of Trade December wheat closed up 8 1/2 cents at US$4.67 1/4 a bushel, down 4 1/2 cents on the week. Kansas City Board of Trade December wheat closed up 4 1/4 cents at US$4.77 3/4, and Minneapolis Grain Exchange December wheat jumped 9 1/2 cents to US$4.94.

 

CBOT December wheat bounced after setting a fresh contract low of US$4.51 in electronic trading. That was below the previous low of US$4.52 3/4, set Wednesday.

 

Wheat was short-term oversold and due for a rebound after a steady recent slide, traders said. It will be difficult for wheat to sustain the rally due to ample global supplies and lackluster export demand, analysts said.

 

The U.S. Department of Agriculture raised its estimate for world wheat ending stocks for 2009-2010 to 186.61 million tonnes from its August estimate of 183.56 million. The increase did not provide anything "new" to the markets but affirmed that global wheat supplies are large, a trader said.

 

Weekly U.S. wheat export sales of 636,400 tonnes were above trade estimates, which ranged from 300,000 tonnes to 500,000 tonnes. However, business is not "overly impressive at all this time of year," an analyst said. The U.S. has competition for export business from other countries with plenty of wheat to sell.

 

Commodity funds bought an estimated 3,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

KCBT December wheat rebounded after hitting a fresh contract low of US$4.64 1/2. That was below its previous low of US$4.67 1/2, set Thursday. The contract ended down 12 1/4 cents on the week.

 

The USDA estimated U.S. wheat ending stocks for 2009-10 at 743 million bushels, unchanged from its August estimate but below the average analyst estimate of 769 million. Some analysts had expected carryout to expand due to the sluggish pace of export demand.

 

It was not too surprising to see carryout stay steady because the USDA is waiting to make changes until it issues its small grains report Sept. 30, traders said.

 

 

Minneapolis Grain Exchange

 

MGE December wheat marked a fresh contract low of US$4.79 1/2, below the previous low of US$4.82. The contract ended down 4 1/2 cents on the week.

 

Traders are looking ahead to the USDA's small grains report with expectations the government will increase its forecast for U.S. spring wheat production. Reports from North Dakota indicate yields are strong, analysts said.