November 29, 2008


US Wheat Review on Friday: Closes mostly higher on month-end positioning



U.S. wheat futures finished mostly higher Friday on month-end positioning after trading both sides in thin volume.


Chicago Board of Trade March wheat jumped 7 1/4 cents to US$5.61 1/4 a bushel. Kansas City Board of Trade March wheat rose 5 1/2 cents to US$5.81 1/2, and Minneapolis Grain Exchange March wheat slipped 1/2 cent to US$6.10 3/4.


CBOT wheat climbed ahead of the close in light trading on small orders, a floor trader said. CBOT March wheat hit a session high of US$5.65 in late dealings before paring gains. The markets had drifted around with little direction for most of the session following the Thanksgiving holiday Thursday.


"There's not a lot of news on wheat," an analyst said. I think that we may be having some deterioration in the quality of the Australian crop."


Farmers in Australia expect to see as much as 1 million tonnes of milling wheat downgraded to animal feed due to damage from wet weather at harvest time, industry members said. That could be supportive to U.S. wheat if buyers are forced to look to the U.S. for high-quality supplies.


Thunderstorms should generally shift away from Australia's wheat areas during the next five to seven days, improving conditions for harvesting, private forecaster T-Storm Weather said in a forecast. However, Queensland is expected to stay wet, the firm said.


The markets did not feel much support from news that Egypt's state-owned wheat buyer, the General Authority for Supply Commodities, bought 55,000 metric tonnes of U.S. soft red winter wheat Thursday in a tender, traders said. The purchase was too small to make a splash and encouraged ideas that Egypt may think that prices will drop further, an analyst said.


Wheat remains in a sideways trend and will continue to watch neighboring and outside markets for direction, an analyst said. Weakness in the U.S. dollar could spark some export demand as it gives foreign countries more buying power to import U.S. commodities.



Kansas City Board of Trade


KCBT wheat rose on end-of-the-month position-squaring and spillover support from the late gains in CBOT wheat, a trader said. Activity was mostly quiet during the day session, with many traders absent from the market.


Weekly U.S. wheat export sales of 438,600 tonnes were within trade estimates of 300,000 to 500,000 tonnes. The sales, all for delivery in 2008-09, were down 14% from the previous week, but up 11% from the prior four-week average, according to the U.S. Department of Agriculture.


In other news, Argentina's farmers had harvested 23% of the wheat crop as of Nov. 27, with widely mixed yields seen after a season of dry weather, the Agriculture Secretariat said in its weekly crop report. The harvest pace was nine percentage points ahead of what it was a year ago.



Minneapolis Grain Exchange


MGE wheat futures drifted around in lackluster activity, a floor trader said. There was "zero" interest in trading wheat after the Thanksgiving holiday and ahead of the weekend, he said.


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