Soft red winter wheat futures on the Chicago Board of Trade soared 3 percent on Friday and front months ended limit-up on dwindling global wheat stocks and strong demand, traders said.
"There's a general sentiment that next week, we're going to see a tighter balance sheet, both on the US and the world. Right now, nobody wants to sell into this thing," said Shawn McCambridge, an analyst for Prudential Financial.
The market had support from trade expectations for a drop in US 2007/08 wheat ending stocks when the US Department of Agriculture issues its December supply/demand report early Tuesday. The average estimate for wheat ending stocks among analysts surveyed by Reuters was 297 million bushels, down from USDA's November figure of 312 million.
Bellwether March wheat closed up the 30-cent daily limit at $9.21-1/2 per bushel. The contract traded synthetically through wheat options at $9.25 at the close, indicating a higher open when trade resumes on Sunday night.
The spot December contract, which is in delivery and has no daily trading limit, settled up 32-1/2 cents at $9.03-1/2. New-crop July ended up 30 cents at $8.08, a contract high.
Commodity funds were net buyers of 5,000 contracts, traders said. Volume was estimated by the CBoT at 76,128 wheat futures and 17,742 options. The market rallied on Thursday after Statistics Canada cut its estimate of the Canadian all-wheat crop. That factor also helped propel the spot spring wheat contract at the Minneapolis Grain Exchange above $10 a bushel.
Spot MGE December what settled up 30 cents Friday at a new record high of $10.43. Egypt on Friday bypassed US wheat and instead bought 115,000 tonnes of Russian wheat, a factor that some said would temper bullish momentum. But others cited the continued strong global buying of wheat as contributing to continued bullish sentiment.
In other export news, India's PEC Ltd will buy 150,000 tonnes of wheat from Australian firm JK International at around $395 a tonne against an import tender, a government source said. Australia's wheat exports for 2007/08 are likely to be cut in half as stocks run out after two consecutive years of drought, trade officials in Sydney said late this week.