US Wheat Review on Friday: Ends mixed; CBOT falls on spillover

 

 

U.S. wheat futures finished mixed Friday, with Chicago Board of Trade and Kansas City Board of Trade contracts stumbling on spillover pressure from weakness in other markets.

 

Minneapolis Grain Exchange wheat futures jumped on production concerns, an analyst said.

 

CBOT September wheat dropped 5 1/2 cents to end at US$8.04 per bushel, down 26 3/4 cents on the week. KCBT September wheat slipped 3/4 cent to US$8.37 3/4, down 26 3/4 cents on the week. MGE September wheat rose 8 cents to US$8.88, down 8 1/2 cents on the week.

 

The winter wheat markets followed CBOT corn and soybeans into negative territory, traders said. The row crops closed sharply lower amid forecasts for favorable weather in the Midwest and on expectations that grain and soy exports will flow out of Argentina after a controversial sliding-scale export tax scheme was revoked.

 

There are some ideas that bearish fundamental factors are priced into the wheat markets, said Tim Hannagan, analyst for Alaron. The world is expected to produce its biggest wheat crop ever in 2008-09 after high prices prompted producers to expand plantings.

 

The U.S. Department of Agriculture sees global 2008-09 wheat production at a record 664 million tonnes. That is up 53 million tonnes from the weather-reduced 2007-08 crop.

 

"Wheat follows corn, we know that," Hannagan said. "We notice its dragging its feet. All of the bearish fundamentals are in. People don't really want to buy wheat but they're very reluctant to sell. You're just getting mild selling in the wheat."

 

Commodity funds sold an estimated 2,000 contracts at the CBOT. Trading was choppy, and volume was thin, a floor trader said.

 

No major impact was seen from Egypt's purchase of 145,000 metric tonnes wheat in a tender, a trader said. The deal includes 60,000 tonnes of U.S. soft red wheat or Canadian soft red wheat.

 

 

Kansas City Board of Trade

 

KCBT wheat futures closed lower on leadership from CBOT wheat and corn, traders said. There was underlying support from solid demand, a trader said.

 

The winter wheat markets traded both sides during the session but succumbed to the spillover selling from the row crops, a trader said. Early strength was attributed to technical buying.

 

 

Minneapolis Grain Exchange

 

MGE spring wheat futures ended higher on production concerns, an analyst said. USDA condition ratings for spring wheat have "collapsed" recently amid reports of unfavorable weather, Hannagan said.

 

"Chicago's in a follower's role to corn, but the spring wheat crop in Minneapolis has a mind of its own," he said.

 

The U.S. Department of Agriculture rated 61% of the spring wheat crop as good-to excellent as of Sunday, down 8 percentage points from the previous week, amid reports of unfavorable dryness in parts of the northern Plains. Condition ratings could drop again in the USDA's weekly crop progress report due out Monday, he said.

 

Government estimates for spring wheat production, issued earlier this month, also were below expectations. The USDA pegged spring wheat production below market expectations at 507 million bushels, compared with the average of analysts' estimates of 537 million.