US Wheat Review on Friday: Pulls back after USDA hikes US carryout

 

 

U.S. wheat futures fell Friday after the U.S. Department of Agriculture reminded traders about ample supplies, although the markets still closed higher on the week.

 

Chicago Board of Trade December wheat ended down 6 cents at US$4.68 a bushel, up 26 3/4 cents on the week. Kansas City Board of Trade December wheat ended down 4 3/4 cents at US$4.85, and Minneapolis Grain Exchange December wheat slipped 2 1/4 cents to US$5.04.

 

The USDA, in its October supply/demand report, pegged 2009-10 U.S. wheat ending stocks at a nine-year high of 864 million bushels, up from its September estimate of 734 million. The increase topped the average of pre-report trade estimates but wasn't a shock, analysts said.

 

The fundamentals for wheat are well known, and bearishness about large global supplies has hung over the markets for weeks. U.S. export sales have lagged behind this marketing year owing to stiff competition from other countries with plenty of wheat.

 

"The USDA took U.S. wheat ending supplies up another significant amount," said Mike Krueger, president of The Money Farm, a grain marketing advisory service.

 

Wheat's setback Friday followed a run-up to one-month highs Thursday. Short-covering and technical buying helped prices rise earlier in the week, and non-commercial speculative funds continue to hold a large net short position in CBOT wheat, analysts said.

 

"You could have the wheat market run farther faster than many people think, but you need a trigger to make that happen and so far we haven't seen that," Krueger said.

 

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

 

 

Kansas City Board of Trade

 

KCBT December wheat ended up 25 1/2 cents on the week.

 

Prices slipped Friday on the rise in U.S. ending stocks and estimates for weakening demand, traders said. The USDA cut its forecasts for U.S. wheat exports and feed use from September.

 

Strength in the U.S. dollar added to the bearish tonnee in wheat, a trader said. A firm dollar makes U.S. wheat less attractive to foreign buyers.

 

Wheat next week will likely reprise its role as a follower and take direction from neighboring CBOT corn and soy, Krueger said. The row crops will asses the impact of weekend weather and the potential to advance the harvest, he said.

 

"Wheat on its own is directionless," Krueger said. "It needs help from somebody else."

 

 

Minneapolis Grain Exchange

 

MGE December wheat closed up 26 cents on the week.

 

The USDA raised its forecasts for nearly all U.S. wheat classes from September, with hard spring wheat seeing the largest percentage increase. Stocks of hard spring wheat rose 32.5% from last month to 253 million bushels.

 

Producers in the northern U.S. Plains are wrapping up the spring wheat harvest amid some disappointment about low protein levels. Hard red spring wheat is typically prized for its high protein content.