November 3, 2007

 

US Wheat Review on Friday: Ends mostly higher on bounce, spillover

 

 

U.S. wheat futures closed mostly higher Friday as the markets bounced slightly from recent weakness amid spillover strength from neighboring and outside markets, traders said.

 

Chicago Board of Trade December wheat ended up 1/4 cent at US$7.78 1/2 per bushel, down 21 1/2 cents on the week. Kansas City Board of Trade December wheat rose 1 3/4 cents to US$8.06 1/4, down 21 1/4 cents on the week. Minneapolis Grain Exchange December wheat settled up 7 1/2 cents at US$8.13 1/2, down 13 1/2 cents on the week.

 

Wheat futures closed sharply lower Thursday and were due for a rebound, traders said. Short covering gave prices a bit of a boost, they said.

 

CBOT soybean and corn futures also provided carryover strength for wheat, floor traders said. The markets climbed on firmer outside markets, including crude oil and gold, they said.

 

A sale of U.S. wheat to Egypt was considered to be another slightly supportive factor, analysts said. Egypt's main wheat buyer, the state-owned General Authority for Supply Commodities, said it bought a total of 275,000 metric tonnes of Canadian, U.S. and Russian wheat in a tender.

 

Of the total, GASC bought 60,000 tonnes of Canadian Eastern soft red winter wheat for shipment Dec. 1-15 on a free on board basis. The rest of the wheat was purchased in Egyptian pounds in a local tender.

 

Of the grain purchased in the local tender, 60,000 tonnes were U.S. soft red winter wheat and 155,000 tonnes were Russian wheat.

 

The U.S. sale offered some fundamental support because the trade did not expect Egypt to buy so much wheat or take any from the U.S., said Larry Glenn, owner of Glenn Commodities.

 

India's state-run MMTC Ltd. may float a tender for importing 330,000 metric tonnes of wheat next week, a senior government official said. The tender would be the first in a series of tenders to be floated by MMTC Ltd., STC Ltd. and PEC Ltd. to import 1 million tonnes of wheat between January and March.

 

India should end up importing around 2.3 million tonnes of wheat this year, much less than the government's summer prediction of 5 million tonnes, the official said. The U.S. is not expected to sell any wheat to India due to disagreements over phytosanitary requirements.

 

In Argentina, main crop areas will be cooler to much cooler this weekend. There is a slight chance for frost in the southern wheat areas, although the cold snap isn't expected to cause significant damage to wheat, DTN Meteorlogix said.

 

Widespread rain or thunderstorms, meanwhile, are headed for eastern Australia crop areas during the next day or so, followed by cool conditions, Meteorlogix said. Rain in the east is unfavorable for maturing wheat and may delay harvest of the already-reduced Australia wheat crop, the weather firm said.

 

 

Kansas City Board of Trade

 

KCBT wheat futures rose on borrowed strength from the outside markets, a floor trader said. The wheat market is still in a downward trend and technicals are weak, but firmer crude oil prevented prices from falling, he said.

 

Some traders saw Egypt's purchase of wheat as a bullish indication that the U.S. is competitive on the world market, a KCBT trader said. There was some support from dryness in western growing areas of the Plains, an analyst added.

 

More rain is needed for hard red winter wheat in western Kansas, eastern Colorado and southward, although no moisture is forecast for the next seven to 10 days, T-Storm Weather said. Rain would help encourage healthy root development and give plants a solid moisture foundation for upcoming dormancy, the private weather firm says.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures led the upside in a technical rebound from Thursday's losses, a floor trader said. There was some short covering but not much commercial demand, he said.

 

In other news, strong demand for wheat from western Canadian ethanol plants may be causing some farmers to back out of their longer-term contracts with the Canadian Wheat Board in favor of a quick return, a producer said. The CWB said there are always some producers every year who choose to buy back their contracts, but couldn't say if any of this year's activity was tied to higher prices offered by ethanol plants.