Nearby spring wheat futures on the Minneapolis Grain Exchange closed up their 30-cent limit on Monday, buoyed by speculation over large reductions in Australian crop estimates and import plans by Pakistan, traders said. The December spring wheat contract ended limit up at $8.25 per bushel, with March likewise limit up at $8.27-1/4.
The gains came amid rampant speculation over the size of cuts expected in an updated official forecast of the Australian wheat crop due on Tuesday. "There was a little bit of buy the rumour, sell the fact," said one MGE floor source. "The trade is looking for a significant reduction, maybe in the 15 to 18 million tonne range." Dry weather has hit the crop in Australia, among the world's top three wheat exporters alongside the US and Canada.
The Australian Bureau of Agriculture's official forecast for its wheat crop is likely to be cut to less than 20 million tonnes on Tuesday, from 22.5 million tonnes. There was also bullish news on Monday that the Pakistan government said on Saturday it had decided to import 1 million tonnes of wheat to maintain a reasonable buffer stock.
Also supportive, the French farm ministry again cut its estimate for the country's 2007 soft wheat crop on Monday, to 31.65 million tonnes from 32.9 million tonnes seen last month and down nearly 5 percent from last year. The tight world wheat supplies situation prompted sharp gains in European milling wheat futures as well on Monday.
USA's report on Monday on weekly export inspections of wheat was neutral to slightly disappointing. USDA said export inspections of US wheat-totalled 29.650 million bushels, below trade estimates for 30-35 million bushels. In other export news on Monday, Taiwan's Flour Mills Association will hold a tender on Thursday to buy a total of 88,000 tonnes of US No 1 wheat in two shipments, Taipei-based traders said on Monday.
Also, two groups of South Korean flour millers have issued tenders to buy a total of 47,700 tonnes of US No 1 wheat, with shipment set between October and December. The tenders close on Tuesday. There were 3 redeliveries posted on Monday against the expired September contract. ADM Investor Services was the sole stopper.
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