US Wheat Review on Friday: Rises on technical buying, short covering

 

 

Technical buying and short covering pushed U.S. wheat futures higher in thin volume Friday after U.S. Department of Agriculture crop reports confirmed forecasts for increasing production and carryout, traders said.

 

Chicago Board of Trade September wheat jumped 12 3/4 cents to US$8.30 3/4 per bushel, down 56 3/4 cents on the week. Kansas City Board of Trade September wheat climbed 16 cents to US$8.64 1/2, down 47 3/4 cents on the week. Minneapolis Grain Exchange September wheat gained 14 3/4 cents to US$8.96 1/2, down 41 1/4 cents on the week.

 

The markets bounced back from losses earlier in the week. There was "no shock" in the reports, which were construed as being mostly neutral for the markets, a CBOT floor trader said.

 

The USDA estimated 2008-09 U.S. wheat carryout at 537 million bushels, compared to the average analyst estimate of 538 million and the agency's June estimate of 306 million. The government's projection for all winter wheat production of 1.864 billion bushels was above the average analyst estimate of 1.852 billion.

 

"It pretty much came in as expected," Greg Wagner, analyst for AgResource Company, said about the data. "We would expect bigger increases down the road."

 

Despite the forecasts for increased supplies, there is "starting to be some talk and concern about getting wheat acreage for the fall," which is fundamentally bullish for the markets, said Jason Britt, a broker and analyst at Central State Commodities. Tight supplies of corn and soybeans have pushed the row crops to historic highs, while wheat prices are well off highs set earlier this year on concerns about dwindling global supplies.

 

"There's just not a lot of give in any of these markets," Britt said. "It's going to be so competitive. You've got to battle to keep the wheat acreage higher, or you'll find yourself back in the same situation we were in before."

 

 

Kansas City Board of Trade

 

KCBT wheat futures rose mostly on technical buying and short covering, a floor trader said.

 

Volume was thin, considering that USDA data were released, he said.

 

The market largely shrugged off the USDA data, as the numbers came in mostly as expected. The USDA pegged hard red winter wheat production at 1.040 billion bushels, above the average analyst estimate of 1.037 billion and the USDA's June estimate of 1.030 billion.

 

 

Minneapolis Grain Exchange

 

At the MGE, a lower-than-expected USDA estimate for spring wheat production is considered supportive over the long term, a floor trader said.

 

The USDA estimated spring wheat production at 507 million bushels, below the average analyst estimate of 537 million.

 

Trading was slow, the trader said.