January 6, 2006

 

US Wheat Review on Thursday: Ends lower on speculative sales, egypt

 

 

U.S. wheat futures ended lower Thursday on technical and speculative sales after this week's rally to match contract highs in nearby KCBT and MGE March wheat and on global wheat export competition, brokers said.

 

Disappointment that Egypt bought 320,000 tonnes of Australian and Russian wheat and no U.S. grain weighed on the market, while some traders also noted that Russian offers had been cheaper and more vigorous than had been expected.

 

"The values of these purchases once again underscores how much U.S. values are over world values," one KCBT source said.

 

Midsession news of aggressive European Union marketing actions also pressured U.S. wheat.

 

The E.U. granted Thursday export licenses for 356,000 tonnes of free-market wheat at a maximum refund of EUR8.49/tonne, more aggressive than the Dec. 22 grant of 194,000 tonnes at EUR8.00/tonne

 

Finally, uncertainty about overnight reports of Iraq purchases of 1 million tonnes of U.S. hard wheat was bearish, brokers said.

 

Some U.S. wheat traders suspect the news referred to old unshipped purchases while U.S.-based wheat sources were unable to confirm or deny Iraq rumors. KCBT traders said March/May and March/July spreads firmed early on the overnight news.

 

"There was a late index bid, but we've been unable to take out the highs in this recent consolidation," one CBOT wheat broker said.

 

Anticipation of early buying this year by commodity index funds, which buy and hold commodities similar to indexes that buy and hold stocks or bonds, helped rally wheat futures in December and aided in this week's rally, brokers noted.

 

CBOT March wheat closed Thursday down 6 1/2 cents at US$3.39 3/4; May ended down 6 1/2 cents at US$3.49 1/4 per bushel.

 

Funds sold about 2,500 CBOT wheat, led by Citigroup's sale of 800 March, JP Morgan's sale of 600 March and Prudential's sale of 500 March. O'Connor and Co. bought 1,500 March late, brokers said.

 

 

Kansas City Board of Trade

 

KCBT March wheat settled Thursday down 5 cents at US$3.85 1/2 per bushel after matching this week its contract high of US$3.94. May ended down 2 1/4 cents at at US$3.84.

 

The KCBT March/CBOT March wheat spread settled at 45 3/4 cents, premium KCBT, after closing Wednesday at 44 1/4 cents.

 

ADM Investor Services bought 600 March, FC Stonnee sold 100 March, Fimat sold 200 March and 200 July, Man Financial bought 200 March, Prudential Financial bought 200 July and UBS sold 200 March, brokers said.

 

Crop concerns amid extremely dry conditions across the southern U.S. Great Plains underpinned deferred contracts.

 

 

Minneapolis Grain Exchange

 

MGE March closed Thursday down 4 3/4 cents at US$3.90 1/2 after matching Tuesday its contract high of US$3.99. May wheat settled down 4 1/2 cents at US$3.90.

 

Cash U.S. spring wheat basis bids were steady Thursday, sources said.

 

Minneapolis rail receipts of wheat on Thursday totaled 182 cars, above last year's 156 cars. Durum receipts totaled 31 cars, below last year's 41 cars.