March 23, 2007

 

US Wheat Review on Thursday: Ends mostly higher; market waiting for USDA

 

 

U.S. wheat futures ended mostly higher Thursday as market participants continued to await the release of new government estimates on U.S. planting intentions and grain stocks, traders and analysts said.

 

Chicago Board of Trade May wheat closed 1 1/2 cents higher at US$4.67 per bushel, Kansas City Board of Trade finished 1/4 cents higher at US$4.87, and Minneapolis Grain Exchange ended up 1/2 cent at US$5.05 3/4.

 

Trading during the day session was quiet and choppy with little fresh news to direct market activity, analysts said. Traders are waiting for the U.S. Department of Agriculture to release its report on U.S. planting intentions and grain stocks on March 30, they said.

 

The report is highly anticipated because farmers are expected to shift millions of acres of farmland to corn this spring to take advantage of high prices and growing demand for ethanol.

 

"There's not been a lot of activity anywhere because we're waiting to see what the report says," said Phil Roach, analyst with Roach Ag Marketing.

 

There was some gentle support for prices from light short covering and bargain buying, CBOT floor traders said. Funds also bought an estimated 1,000 contracts at CBOT.

 

In pit trades, FC Stonnee bought 300 December. Fimat and Goldenberg Hehmeyer each bought 200 May, while Fortis sold 200 May. Man Financial bought 200 May and sold 200 May.

 

In other news, the USDA reported weekly U.S. wheat export sales for the week ended March 15 were 474,900 metric tonnes, within trade expectations. Analysts surveyed by Dow Jones Newswires had predicted sales would be 300,000 to 600,000 tonnes.

 

The weekly sales were 7% above the previous week and 16% above the prior four-week average, according to the USDA. Big buyers included South Korea, which took 90,200 tonnes; Nigeria, which bought 85,200 tonnes; and Japan, which bought 72,800 tonnes.

 

There has been other export news this week about sales to Egypt and Morocco, although the overall pace of export business is nothing special, analysts said.

 

Morocco's state wheat buyer, the Office National Interprofessional des Cereales et des Legumineuses, said it had bought 200,000 metric tonnes of U.S. soft wheat in a tender. The wheat is for shipment before the end of May and the tender took place within the framework of the tariff rate quota agreed between Morocco and the U.S. in January 2006.

 

"I look back over the past five weeks on export sales, and there's nothing there of excitement," Roach said. "It looks to me like it's just routine business."

 

 

Kansas City Board of Trade

 

Inter-market spread trading between Kansas City and Chicago continued with traders buying KCBT and selling CBOT, a floor trader said. Overall, volume was light amid a slow news front, he said.

 

Gains at CBOT helped lift KCBT wheat futures, the trader added.

 

"It's the same old story, nothing new," he said.

 

There continues to be bearish pressure on prices from favorable growing conditions for hard red winter wheat, analysts said. The U.S. Plains have seen episodes of beneficial moisture recently, and the crop is greening up nicely, agronomists have said.

 

"The crop should be phenomenal," Roach said. "The potential is there for a large crop."

 

A Drought Monitor report issued Thursday by the USDA, National Weather Service and National Drought Mitigation Center said isolated heavy rains resulted in some minor reductions of dryness and drought in the southern Plains, including southeastern Kansas.

 

 

Minneapolis Grain Exchange

 

MGE wheat futures largely followed CBOT activity, a floor trader said. There were not many new inputs out, and interest in trading was low, he added.

 

"We were really pretty much just a follower," the MGE trader said.

 

In other news, warmer-than-normal temperatures returned to the southern regions of the Canadian prairies during the week ended March 19, melting any remaining snowpack, according to the Canadian Wheat Board's latest crop update.

 

The snowpack in southern Saskatchewan and Alberta diminished rapidly with the warmer readings, with bare soil now reported in most areas south of the Trans Canada Highway, the CWB said. Additional precipitation is needed in this region to improve subsoil moisture levels.