January 12, 2006

 

US Wheat Review on Wednesday: Up before USDA data, led by hard wheat

 

 

U.S. wheat futures settled higher Wednesday on late speculative buying, with higher-protein hard wheats leading ahead of the U.S. Department of Agriculture's seedings and quarterly stocks data due to be released on Thursday, brokers said.

 

Grain analysts forecast the USDA will report Thursday tight HRW stocks and only a 3% increase in 2006 U.S. HRW winter wheat seedings to 30.8 million acres.

 

Analysts estimated the USDA would report Thursday a 5.6% gain in U.S. winter wheat seedings to 42.6 million acres, a 19% gain in U.S. soft red winter wheat plantings to 7.30 million acres, and a 5.2% boost in white wheat plantings to 4.47 million acres.

 

The USDA was expected to report Dec. 1 quarterly U.S. wheat stocks at 1.418 billion bushels, below last year's 1.430 billion, they noted.

 

And grain analysts forecast the USDA would estimate 2005-06 U.S. wheat ending stocks at 522 million bushels, below its December forecast of 530 million and below last year's 540 million.

 

The USDA will release its report at 7:30 a.m. CST Thursday.

 

Meanwhile, the annual rebalancing of an index fund has been supportive so far this week, with estimates of about 3,000 CBOT wheat contracts bought per day, one broker said. The index fund was thought to be taking monies out of more expensive commodities such as energy and investing in less expensive commodities - such as grains, he added.

 

CBOT March wheat ended Wednesday up 1 1/4 cents at US$3.30 1/2; while May ended up 1 3/4 cents at US$3.41 1/4 per bushel.

 

Commodity funds were net buyers, brokers said. Fimat bought 600 March and 300 July, Calyon Financial bought 500 March, ABN Amro bought 400 March, Rand Financial sold 500 March and Kottke and UBS each sold 300 March, brokers said.

 

Midday Gulf spot cash soft red winter wheat basis bids rose 1 cent Wednesday while cash interior basis bids were mostly steady, cash sources said.

 

In U.S. wheat export news, South Korean companies bought 11,000 metric tonnes of U.S. wheat, sources said.

 

In global wheat news, European wheat prices were steady to weak Wednesday on slow exports and as traders waited for official announcement Thursday of the price for new intervention wheat export tenders.

 

Russia bought 6,480 metric tonnes of milling grain at the intervention trading session held Wednesday at the national commodities exchange in Moscow, all of it third-grade soft milling.

 

Total Russian purchases to date since intervention purchases began Aug. 29 were 1,656,850 tonnes, including 1,428,990 tonnes of third-grade wheat, 186,570 tonnes of fourth-grade wheat and 41,290 tonnes of milling rye.

 

 

Kansas City Board of Trade

 

KCBT March wheat settled Wednesday up 3 cents at US$3.75 per bushel after finding support at the 50-day moving average of US$3.70 1/2; while May ended up 1 1/4 cents at US$3.73 3/4.

 

The KCBT March/CBOT March wheat spread settled at 44 1/2 cents, premium KCBT, after closing Tuesday at 42 3/4 cents.

 

Deferred KCBT new-crop futures found support from lingering crop concerns despite Wednesday's forecasts for light rains within the next 3-4 days, brokers said.

 

 

Minneapolis Grain Exchange

 

MGE March closed Wednesday up 3 3/4 cents at US$3.86 1/2 and May wheat settled up 2 3/4 cents at US$3.87 1/4.

 

Cash U.S. spring wheat basis bids were steady to 10 cents lower Wednesday, sources said.

 

Minneapolis rail receipts of wheat on Wednesday totaled 149 cars, less than last year's 159 cars. Durum receipts totaled 24 cars, less than last year's 36 cars.