MGE spring wheat higher

Spring wheat futures on the Minneapolis Grain Exchange closed sharply higher on Thursday, with front-month July rising to a fresh 11-year high in spread-dominated dealings, traders said. The market got a big boost from a US Department of Agriculture announcement that exporters sold 160,000 tonnes of US spring wheat to an unknown destination for 2007/08.
"The spring wheat sale this caught people a little off guard," said Roy Huckabay, an analyst with the Inn Group in Chicago. Also bullish were concerns about low protein in the US hard red winter wheat crop, which was raising demand for high-protein spring wheat.
That factor boosted Minneapolis July wheat on both intra-market bull spreads, and on an inter-market basis against Chicago and Kansas City wheat. Minneapolis July spring wheat settled up 14-3/4 cents at $6.05-1/4 per bushel after reaching $6.16, which was the highest spring wheat spot price since 1996.
September rose 10-1/2 cents to $6.07 and December gained 9 cents to end at $6.17-1/4. Bull spreading was aggressive, with firms buying MGE July against September. The July/September spread traded from a carry of 9 cents, premium September, to an inverse of 5 cents, premium July. Sellers were scarce, adding to the volatility.
"July volume has dried up. Today it felt like the buying was panic-type buying," one floor source said. The July/December spread has also been strengthening in the last few days, moving from a carry of 26-1/2 cents last week to 12 cents at Thursday's close.
Inter-market spreading was another feature, with commercials buying Minneapolis against Chicago Board of Trade and Kansas City Board of Trade wheat. "It's someone wanting to capture the old-crop deliverable inventories to use, because they're higher protein," Huckabay said. Bullish weekly export data supported values at all three US wheat exchanges.
The US Department of Agriculture said 541,000 tonnes of US wheat sold for export last week, above trade estimates for 150,000 to 350,000 tonnes. Concerns about tightening global wheat supplies continued to underpin values.
Ukrainian consultants APK-Inform estimated Ukraine's 2007 wheat harvest at 12.747 million tonnes, down from a previous 14.1 million due to drought. Ukraine harvested 13.9 million tonnes of wheat last year. Meanwhile, Tunisia bought 117,000 tonnes of milling wheat and South Korea bought a total of 42,700 tonnes of US wheat in two separate purchases.
Bangladesh were tendering for 138,000 tonnes of wheat. Japan bought 48,500 tonnes of US and Canadian wheat at its weekly tender but passed on two cargoes, one Canadian and one Australian, due to high prices.