November 8, 2008


US Wheat Review on Friday: Markets settle mostly up; Kansas City Board of Trade, Minneapolis Grain Exchange rise



U.S. wheat futures closed mostly higher Friday after trading both sides during the day session ahead of the weekend and government crop reports due out Monday.


Chicago Board of Trade December wheat slipped 1 1/2 cents to US$5.21 a bushel, down 15 1/4 cents on the week. Kansas City Board of Trade December wheat rose 5 cents to US$5.68, and Minneapolis Grain Exchange December wheat jumped 6 cents to US$6.40.


CBOT wheat finished slightly lower with corn. A rebound in the U.S. dollar added pressure to the grains, as a stronger greenback gives foreign countries less buying power to import commodities, an analyst said.


"We're so heavily dependent upon exports this time of year for price movements," he said.


There are ideas CBOT soft red wheat prices need to soften to make the U.S. more competitive on the world export market, said Brian Hoops, president of Midwest Market Solutions. Weekly U.S. wheat export sales for delivery in 2008-09, announced Thursday, totaled 366,300 tonnes, but only 12,300 tonnes were SRW wheat, according to the U.S. Department of Agriculture.


"Traders are thinking soft wheat needs to go a little bit lower," Hoops said.


The markets were waiting for the USDA to issue November crop reports at 8:30 a.m. EST Monday, although the data is expected to be more of an event for corn and soybeans than for wheat. There has been some position-evening ahead Monday's release, analysts said.


The crop reports will include updated 2008-09 carryout estimates for U.S. wheat, corn and soybeans. They will also include fresh production and yield estimates for corn and soybeans.


The average of analysts' estimates for U.S. wheat carryout in 2008-2009 is 594 million bushels, down from the USDA's October estimate of 601 million, according to a Dow Jones Newswires survey of 12 analysts. Solid export demand and feed use could prompt the USDA to trim carryout, analysts said.


"Most of the people are interested in the corn and the bean numbers," a trader said. "Wheat's going to be a bystander, unless we get a surprise."



Kansas City Board of Trade


There was some flat price buying of KCBT December wheat on the close and some spread trading, a floor trader said. Volume was light for most of the session but picked up ahead of the close as prices rose, he said.


"Late, we got a little bit of a fire," the trader said, referring to the late price strength.


Still, KCBT December wheat had a relatively narrow range of US$5.60 1/2 to US$5.70 1/4. KCBT December wheat closed down 5 cents on the week.


"We had such a dinky range, barely a 10-cent range in the Dec," a KCBT trader said. "That's usually an opening range."



Minneapolis Grain Exchange


MGE December wheat led the upside, as hard red spring wheat continued to increase its premium over the other classes. Basis has been firming up throughout the week, a MGE trader said.


Producers aren't selling much HRS wheat, traded at the MGE, a floor trader said. A snow storm in the U.S. northern Plains is delaying the corn harvest and allowing farmers to keep wheat in their bins even longer before deciding whether to make room for corn, he said.


"Farmers just aren't letting go of what they've got in their bins," a trader said.


MGE December wheat closed down 7 1/2 cents on the week. There was some buying of MGE March wheat against CBOT in spread trades, a trader said.


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