December 7, 2007
US Wheat Review on Thursday: Settles up; Minneapolis grain exchange leads, setting new highs
U.S. wheat futures ended higher Thursday, with Minneapolis wheat rallying to new all-time highs on tightening world supply concerns and underlying demand, analysts said.
March Chicago Board of Trade wheat ended 6 1/2 cents higher at US$8.91 1/2, March Kansas City Board of Trade wheat settled 10 3/4 cents higher at US$9.20, and March Minneapolis Grain Exchange wheat finished 17 3/4 cents higher at US$9.72 1/2.
A lower wheat production forecast for Canada, good export demand and varying opinions on weather for U.S. winter wheat crops in the plains provided support to lift futures, said Bill Nelson, associate vice president A.G. Edwards and Sons in St. Louis, Mo.
The nearby December MGE wheat futures rallied to a new high, reacting to lower supplies from the U.S.'s nearest competitor Canada and that adds to an already tight global supply picture, Nelson added.
Canada, a major wheat producer, reduced its estimate of 2007-08 spring production to 13.8 million metric tonnes, down from the 14.3 million estimated in October and well below the 18.617 million tonnes produced the previous year. Statistics Canada also reduced its estimates for Canadian winter wheat and durum production.
Price strength was seen across all U.S. wheat futures markets, but MGE spring wheat futures were the clear upside leader, with market continuing to add premium versus Chicago and Kansas City.
Otherwise, overall volume was relatively light in regards to the price action, but weather concerns and technical strength continued to fuel bullish optimism, traders said. The market is poised to continue it higher theme overnight, with news that Egypt is tendering for supplies and Thursday's firm close at the MGE leading the charge, floor traders said.
Egypt's state-owned General Authority for Supply Commodities is tendering Friday to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment Dec. 25 to Jan. 15, on a free-on-board basis, an official said Thursday. GASC is looking to purchase 55,000 to 60,000 tonnes of U.S. hard red winter wheat, U.S. soft red wheat, U.S. soft white wheat, French milling wheat, Argentine wheat, Kazakhstan wheat, or Canadian soft wheat, Nomani Nomani, undersecretary of the vice chairman of GASC, told Dow Jones Newswires.
The DTN Meteorlogix Weather forecast said the Central/Southern Plains will see some snow, ice or rain in the eastern areas, but it's questionable whether it will have much effect on soil moisture. Most of the moisture this weekend will fall along a line from Wichita, Kan., to the Lubbock, Texas, area in the Panhandle. The rest of the region will be mostly dry. Temperatures will be normal or higher in the west, and normal or lower in the east, Meteorlogix said.
In CBOT pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 3,000 lots.
KANSAS CITY BOARD OF TRADE
KCBT wheat futures ended higher, feeding off the bullish momentum from Minneapolis wheat. Commission house buying reversed early market weakness, traders said. The ability of the markets to take out yesterday's highs uncovered buying, and triggered some small buy stops, traders added. Volume remained light, with little fresh news in the marketplace, analysts added.
MINNEAPOLIS GRAIN EXCHANGE
MGE wheat futures ended sharply higher, carving out new all-time highs. MGE wheat was upside leader of wheat futures, with concerns over tightening supplies amid solid world demand elevating prices, analysts said. The nearby December contract rallied to an intraday high of US$10.13 per bushel, with speculative and commercial buying featured, a MGE floor broker said. Overall activity was light, but with bullish tidbits underpinning prices technical strength helped lift futures, he added.
