November 21, 2009

 

US Wheat Review on Friday: Slips on profit-taking; ends up for week

 

 

U.S. wheat futures continued to pull back from recent gains Friday and closed modestly lower ahead of the weekend.

 

Chicago Board of Trade December wheat ended down 2 3/4 cents at US$5.59 3/4 a bushel. Kansas City Board of Trade December wheat dropped 4 1/4 cents to US$5.56 3/4, and Minneapolis Grain Exchange December wheat shed 4 1/2 cents to US$5.64.

 

Traders booked profits going into the weekend after prices climbed earlier in the week on fund buying, analysts said. Losses followed lower closes on Wednesday and Thursday. Commodity funds sold an estimated 2,000 contracts at the CBOT Friday.

 

"We had funds absent the last couple days," said Larry Glenn, broker and analyst at Frontier Ag. "Without their buy paper, this market's going lower off fundamentals."

 

Fundamentals are seen as weak because world supplies are ample, and demand for U.S. wheat is slow. There is strong competition for export business on the world market because there is a lot of wheat to go around.

 

Volume is expected to be thin next week as the U.S. Thanksgiving holiday approaches, a trader said. The CBOT, KCBT and MGE are closed Thursday for Thanksgiving and close early Friday.

 

"If the funds return, it'll work higher," Glenn said about the wheat market. "Stay tuned."

 

Kansas City Board of Trade

 

KCBT December wheat ended up 16 1/4 cents on the week.

 

A premium in CBOT wheat futures over KCBT wheat looks justified "at the moment" because of a decline in soft red winter wheat plantings, said Alan Brugler, president of Brugler Marketing & Management. It's unusual for CBOT to hold a premium because it trades SRW wheat, which has a lower protein content than hard red winter wheat traded at the KCBT.

 

SRW wheat plantings are thought to be down from last year due to weak cash prices and a delayed soy harvest in the U.S. Midwest that slowed wheat seedings. Newly planted HRW wheat in the Plains, meanwhile, has "fairly good crop development," Brugler said.

 

CBOT July wheat, which represents the new crop, in electronic trading closed at US$6.02 3/4. KCBT July wheat ended at US$5.95.

 

Minneapolis Grain Exchange

 

MGE December wheat ended up 8 1/4 cents on the week.

 

Strength in the U.S. dollar added pressure to the grains, a trader said. U.S. wheat is priced too high to be competitive for export business, as was illustrated by weak weekly U.S. wheat export sales announced Thursday, he said.