US Wheat Review on Thursday: Ends mostly lower as traders await data
U.S. wheat futures settled mostly lower Thursday as traders looked ahead to crop reports that aren't expected to unleash bullish surprises for the markets.
Chicago Board of Trade December wheat slipped 3 1/4 cents to US$6.04 3/4 per bushel. Kansas City Board of Trade December wheat settled unchanged at US$6.38, and Minneapolis Grain Exchange December wheat rose 2 1/2 cents to US$6.76 3/4.
Trading was slow and choppy going into the U.S. Department of Agriculture's October supply/demand and crop production reports, due out at 8:30 a.m. EDT Friday. Some market participants took to the sidelines after recent volatility in financial markets, an analyst said.
The USDA, in the supply/demand report, may raise its production forecasts for the U.S., Canada and Black Sea region, analysts said. There is "some concern that with the crops overseas seemingly getting a bit larger, that may contribute to a higher world carryout" and more export competition for the U.S., a market analyst said.
Export sales have been running ahead of the pace needed to meet the USDA's target for the year, as countries need to refill supplies after crops failed last year due to poor weather, the market analyst said. As of Oct. 2, 18 weeks into the marketing year, total commitments were 65% of the USDA's target.
"It remains to be seen if that export pace is going to hold up once other countries' supplies become available," the analyst said.
The world is expected to produce a record world wheat crop in 2008-09 after farmers expanded plantings last year to take advantage of high prices. Demand for U.S. wheat may taper off once the E.U. and Australia bring their crops online, an analyst said.
Kansas City Board of Trade
KCBT wheat futures traded higher for much of the day session but were unable to hold onto the gains. Volume was thin, a KCBT floor trader said.
Total weekly U.S. wheat export sales of 565,800 tonnes were at the high end of trade estimates, which ranged from 350,000 to 600,000 tonnes. The solid pace of business followed a recent trend of sales that has been good but not "astronomical," a KCBT floor trader said.
The USDA reports Friday are expected to be more of an event for soybeans than wheat, the trader said. Wheat should remain a follower of CBOT soybeans and corn, she said.
Minneapolis Grain Exchange
MGE wheat struggled to advance, although "wheat wanted to get dragged along late by the corn and the beans," a MGE floor trader said. CBOT corn and soybeans closed with double-digit gains.
"Tomorrow's report shouldn't have anything really friendly for wheat in it," the MGE floor trader said. "People didn't necessarily want to take it home long."
Nearby December wheat found some support from spreading and from basis levels that are firming due to a lack of grain movement, a floor trader said. Domestic users are tending to buy MGE wheat against KCBT wheat in spread trades, a trader said.