US Wheat Review on Wednesday: Ends higher on technical buys, spillover

 

 

U.S. wheat futures closed higher Wednesday on technical buying and spillover support from neighboring markets.

 

Chicago Board of Trade September wheat surged 29 1/2 cents to US$8.74 3/4 per bushel, its highest close since July 3. Kansas City Board of Trade September wheat rose 25 1/2 cents to US$9.06, and Minneapolis Grain Exchange September wheat jumped 25 cents to US$9.44 1/2.

 

Nearby CBOT September wheat climbed above its 200-day moving averages after trading in the high end of their recent ranges. Short-covering helped support gains, along with strength in CBOT corn and soybeans, a CBOT trader said.

 

"If corn goes up, then you're going to have a battle of acres in the soft red wheat belt," said Sid Love, analyst for Kropf & Love Consulting. "Are you going to plant less soft red? Probably."

 

Soft red winter wheat and corn are both planted in states like Illinois, Missouri and Indiana. SRW wheat is used to make pastries and snack foods.

 

Worries about low quality in the E.U. crop due to wet weather at harvest time may have added some support, Love said. Rain in Germany toward the end of harvest could have a negative impact on that country's harvest, said John Oades, vice president of U.S. Wheat Associates, an industry group that promotes U.S wheat exports.

 

"They're having some rain delays over there," Love said about Europe. "I don't know that I get all that fired up on that. I think there's plenty of wheat on the world basis."

 

Uncertainty above the size of Australia's crop also remains in the back of traders' minds. Drought has slashed production Down Under for the past two years.

 

"All eyes are on the Australian crop," Oades said. "It is off to a better start than the drought-induced crop of the last two years. If Australia has a large crop, our sales in Southern Asia will be negatively affected."

 

Commodity funds bought an estimated 3,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

Nearby KCBT September wheat closed above the psychologically significant level of US$9. It was the contract's highest close since July 3.

 

The market will take direction Thursday from the USDA's weekly export sales report, due out at 8:30 a.m. EDT. Traders are eager to see whether Iran will show up as a buyer of hard red winter wheat again, as it has resumed U.S. wheat purchases for the first time in 27 years.

 

Analysts expect U.S. wheat export sales for the week ended July 14 to be 700,000 to 1.15 million tonnes. The previous week, sales totaled 650,300 tonnes, according to the USDA.

 

 

Minneapolis Grain Exchange

 

MGE September wheat closed at its highest price since Aug. 14, when the contract settled at US$9.54 1/2. It ended above all the major moving averages.

 

Strength in CBOT soybeans and corn helped support MGE wheat, traders said. Conditions in North Dakota this week have been mostly hot and dry, which should allow for "significant harvest progress," the North Dakota Wheat Commission said.

 

Yields in western North Dakota are running below average, ranging anywhere from 5 to 35 bushels per acre. Test weights are running lower in some areas, with reports of 56 to 58 pounds per bushel and higher than expected in other areas, closer to 58 to 60 pounds, the commission said. Protein levels range anywhere from 14% to 18%.

 

In eastern North Dakota, yields range from 60-80 bushels, higher than average, the commission said. Test weights are high, with most being above 60 pounds, while protein appears to be mostly in the 13% to 14.5% range.