May 17, 2008


US Wheat Review on Friday: Closes mixed; CBOT, Kansas City Board of Trade bounce



U.S. wheat futures closed mixed Friday, with Chicago Board of Trade and Kansas City Board of Trade contracts bouncing a bit after recent setbacks, traders said.


Chicago Board of Trade July wheat jumped 4 cents to close at US$7.75 1/2 per bushel, down 29 cents of the week. Kansas City Board of Trade July wheat rose 2 3/4 cents to US$8.24 1/4, down 21 1/4 cents on the week. Minneapolis Grain Exchange July wheat slipped 3 cents to US$10.04, up 1 cent on the week.


Wheat chopped around during the day session without strong direction. CBOT wheat was seen as being in an oversold condition after briefly slipping below US$7.50 Thursday, and short-covering helped support late gains, a trader said.


Fundamentals remain bearish amid predictions for record world production in 2008-09, analysts said. The Northern Hemisphere's harvest is approaching quickly, they said.


"The last couple of days, you've seen some bouncing off the lows, short-covering off of those that have sold the market," said Tim Hannagan, analyst for Alaron. "There's nothing really bullish in the market. The winter wheat crop seems to be improving here" in the U.S.


Looking ahead, wheat will likely price in bearish supply ideas sometime next week, or by the end of the month at the latest, Hannagan said. The markets could then find support from export demand, he said.


Weekly U.S. wheat export sales for delivery in 2008-09, reported Thursday, were 443,600 tonnes, according to the U.S. Department of Agriculture. That was considered strong, considering prices remain historically high, traders said.


"Look at the new-crop sales," Hannagan said. "They were monstrous. They were global. We're going to move out of a bearish supply side issue and we're going to find that low next week, and then we're going to find a demand side rally."



Kansas City Board of Trade


KCBT wheat futures see-sawed around before finding late strength from short-covering and some bullish chatter that U.S. corn plantings might not meet trade expectations in Monday's USDA weekly crop progress report, a KCBT floor trader said. Traders expect to see solid gains in planting amid following weather in the Corn Belt, so continued delays would be bullish for corn and "wheat follows corn," he said.


"Overall, (there was) just kind of light volume and choppy trade," the KCBT trader said. "We had a real narrow range here."



Minneapolis Grain Exchange


MGE wheat futures sank amid a lack of fresh bullish news, a trader said. Volume was "very light," he said.


The July/September spread traded in a range of about US$1.35 to US$1.45, which was tight compared to earlier in the week, a trader said. Bull spreading boosted MGE July wheat earlier in the week before the spread ran out of steam, traders said.