US Wheat Review on Friday: Markets follow CBOT soybeans higher

 

 

U.S. wheat futures rallied and closed near session highs Friday on spill-over strength from surging Chicago Board of Trade soybeans.

 

Chicago Board of Trade March wheat jumped 17 cents to close at US$6.29 1/2 per bushel, up 18 1/2 cents on the week. Kansas City Board of Trade March wheat climbed 17 3/4 cents to US$6.51, and Minneapolis Grain Exchange March wheat rose 15 3/4 cents to US$6.80 1/4.

 

Wheat was "following along" with soybeans, which advanced on concerns about dryness in Argentina and technical buying, said Dale Durchholz, analyst for AgriVisor. March soybeans settled up 46 1/2 cents at US$10.36.

 

The gains pulled CBOT March wheat above its 10-day moving average near US$6.13, an analyst said. The contract continues to face upside resistance in the area around US$6.50, he said.

 

CBOT wheat was underpinned by fears that cold weather in the Midwest could hurt soft red winter wheat, if it isn't covered by a protective blanket of snow, said Mike Zuzolo, analyst for Risk Management Commodities. The U.S. Department of Agriculture, in a crop report due out at 8:30 a.m. EST Monday, is expected to estimate SRW wheat seedings for 2009 fell significantly from 2008.

 

"I think you've got the soft red belt pretty locked down with expectations that this [cold weather] could really do some damage if there isn't any snow coverage," Zuzolo said.

 

Total U.S. winter wheat plantings for 2009 are expected to drop more than 4% from 2008. The biggest decline is expected in SRW wheat acres due to weak cash prices and the Midwest's delayed soybean and corn harvest.

 

The average of analysts' estimates for SRW wheat acres is 9.381 million acres, down from 11.2 million in 2008, according to a Dow Jones Newswires survey of 10 analysts. SRW wheat is grown in the eastern Midwest and used to make pastries.

 

 

Kansas City Board of Trade

 

The surge in CBOT soybeans and positioning ahead of Monday's USDA data supported KCBT wheat, a trader said. KCBT March wheat ended up 17 1/2 cents on the week.

 

Hard red winter wheat seedings will probably be down from 2008's level due to a sharp decline in prices last year, although weather was favorable for planting, analysts said. U.S. wheat futures sank last year after world supply concerns drove prices to all-time highs in late February.

 

The average of analysts' estimates for HRW wheat seedings is 31.096 million acres, down from 31.22 million in 2008, according to a survey of 10 analysts. HRW wheat is grown in the Plains and used to make bread.

 

 

Minneapolis Grain Exchange

 

MGE wheat trailed the gains in CBOT soybeans, analysts said. MGE March wheat finished up 25 cents on the week.

 

Along with winter wheat seedings estimates, the USDA will issue forecasts for 2008-09 carryout, quarterly grain stocks and crop production. Wheat traders will continue to look at soybeans for direction after the reports come out, Durchholz said.

 

The average of analysts' estimates for grain stocks as of Dec. 1 is 1.365 billion bushels, compared with 1.132 billion a year earlier and 1.857 billion as of Sept. 1. The average of analysts' estimates for 2008-09 U.S. wheat carryout is 600 million bushels, down from the USDA's December estimate of 623 million bushels.