January 10, 2006

 

US Wheat Review on Monday: Lower on technical sales, soy losses

 

 

U.S. wheat futures settled lower Monday, pressured by lingering technical sales as the three nearby March wheat contracts fell below their 20-day moving averages and on a 16-cent loss in CBOT soybeans on better South American soy-growing weather, brokers said.

 

Kansas City Board of Trade hard red winter wheat led losses, unsettled by long liquidation after the CFTC reported a non-commercial net long position of nearly 49,000 KCBT wheat futures and options combined.

 

Monday's U.S. wheat futures losses occurred despite bullish U.S. weekly wheat export inspections of 22.305 million bushels. That figure topped estimates of 13 million to 20 million and last week's holiday-shortened 9.994 million bushels, with HRW wheat inspections of 15.4 million bushels noteworthy, brokers noted.

 

CBOT March wheat ended Monday down 4 1/4 cents at US$3.26 1/2 after falling through its 20-day moving average of US$3.30, while May ended down 3 3/4 cents at US$3.37 per bushel.

 

Commodity funds sold about 2,000 CBOT wheat futures despite the late index-fund buying anticipated since late last year, brokers said. JP Morgan sold about 1,000 March while O'Connor, Prudential and Fimat each bought about 600 March.

 

Midday Gulf spot cash soft red winter wheat basis bids firmed 4 cents while cash interior basis bids were steady to weak, cash sources said.

 

Overnight U.S. wheat export sales were quiet.

 

Traders continued to eye wheat-harvest reports from Argentina and Australia.

 

Argentina's Agriculture Secretariat said Monday that farmers had collected 82% of the country's wheat crop, behind last year's 93%, while the Buenos Aires Cereals Exchange reported 79% of the crop had been harvested.

 

The average yield last week was 2.38 tonnes/hectare, the Exchange said.

 

The U.S. Department of Agriculture, which has forecast the average yield for Argentine wheat this season at 2.39 tonnes/hectare, forecasts the Argentine wheat crop at 12.1 million tonnes.

 

India wheat plantings covered 25.3 million hectares in the Nov. 1-Jan. 9 period, compared with 24.9 million hectares in the year-earlier period, the Ministry of Agriculture said Monday.

 

Moreover, state-run Food Corp. of India, or FCI, will release about 200,000 metric tonnes of wheat in the local market to flour mills in January to ensure adequate supplies and keep prices under check, a senior company executive said Monday. He also noted that imports weren't necessary in the near-term.

 

 

Kansas City Board of Trade

 

KCBT March wheat settled Monday down 8 1/4 cents at US$3.70 1/2 per bushel while May ended down 7 3/4 cents at US$3.69 1/4.

 

ADM Investor Services traded 800 March, FC Stonnee sold 500 July, Fimat bought 500 July and 200 March, Man Financial sold 1,700 March and bought 100 July, the Refco division of Man Financial bought 300 march and sold 200 May, and Shay Grain sold 500 March, bought 250 July and spread 250 March/May brokers said.

 

The KCBT March/CBOT March wheat spread settled at 44 cents, premium KCBT, after closing Friday at 48 cents.

 

Spot cash Kansas City HRW basis were steady to weak late Monday, sources said.

 

 

Minneapolis Grain Exchange

 

MGE March closed Monday down 3 cents at US$3.80 1/2 and May wheat settled down 5 1/4 cents at US$3.79 1/4.

 

Cash U.S. spring wheat basis bids were steady to weak on Monday, sources said.

 

Minneapolis rail receipts of wheat on Monday totaled 223 cars, up on last year's 133 cars. Durum receipts totaled 8 cars, below last year's 1 car.