January 17, 2006

  

US Wheat Outlook on Tuesday: Down 1 cent on Egypt buy; drought limits losses

  

 

U.S. wheat futures were called to open down 1 cent per bushel Tuesday on news that Egypt bought 300,000 metric tonnes of Australian, Russian and French wheat but no U.S. grain, brokers said.

 

Calls for a lower open in Chicago Board of Trade soybean futures were also expected to weigh on wheat, but losses in hard wheat futures in Kansas City and Minneapolis could be tempered by concerns about the U.s. hard red winter wheat crop as a drought lingers in the southern U.S. Great Plains, they noted.

 

All agricultural futures exchanges were closed Monday in observance of the Martin Luther King Jr. holiday.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed down 1/4 cent at US$3.34 1/2 per bushel. First chart resistance was seen at US$3.35 - Friday's high - and then at US$3.38. First support was put at US$3.32 and then at US$3.230.

 

The CFTC reported Friday that speculators in CBOT wheat futures for the week ended January 10 decreased short holdings by 176 lots to hold 75,936 short positions and decreased their long holdings by 432 lots to hold 57,311 long positions.

 

For CBOT wheat futures and options combined, speculators were short 72,119 lots, up 141 contracts from the week before, and long 57,858 contracts, up 1,229 lots from the previous week.

 

For KCBT wheat futures only, speculators for the week ended Jan. 10 cut their net long stance. They decreased their long holdings by 2,895 lots to hold 47,905 long positions and increased their short holdings by 644 lots to hold 4,356 short positions.

 

For KCBT wheat futures and options combined, speculators were long 47,615 lots, down 4,922 contracts, and short 2,976 contracts, down 573 lots from the previous week.

 

For MGE spring wheat futures only, speculators for the week ended Jan. 10 increased their net long position, boosting long holdings by 264 lots to 9,957 lots and decreasing short holdings by 55 lots to 826 lots.

 

For MGE spring wheat futures and options combined, speculators also boosted their net long position, increasing long holdings by 291 lots to 9,606 contracts and decreasing short holdings by 46 lots to 845 contracts.

 

In wheat export news, Egypt said Saturday it had bought 2 cargo each 60,000 tonnes of Australian soft wheat from the Australian wheat board at US$127.50/tonne, 2 cargos each 30,000 tonnes of Russian wheat from Venus at US$122.50/tonne and 2 cargos each 60,000 tonnes of French wheat one from Invivo at US$125.95/tonne and the other from Nidera at US$126.50/tonne. The wheat was bought on a free on board basis, for shipment Feb 16-28.

 

Japan sought 70,000 tonnes of U.S. wheat in an overall tender due Thursday for 115,000 metric tonnes of wheat for March 15-April 15 shipment, a Japanese agricultural minister said.

 

Syria said Tuesday it had canceled a tender to sell 100,000 metric tonnes of Syrian wheat due to a lack of suitable offers.

 

Cash U.S. hard red winter wheat basis bids were steady Tuesday; soft red winter wheat basis bids were steady to firm, with a 3-cent gain in Evansville, Ind.; and spring wheat basis bids were steady to firm, with a 5-cent gain in the spot Minneapolis rail bid grain merchandisers said.

 

In global wheat news, Australian agribusiness AWB Ltd. (AWB.AU) said it was comfortable with its forecast range for production from the new wheat crop of 23 million metric tonnes-to-25 million tonnes with the harvest about 95% complete.

 

The managing director of AWB told a government inquiry Tuesday he was unaware his company had paid kickbacks to Saddam Hussein's regime under the U.N.'s oil-for-food program, despite the tabling of AWB documents hinting at irregular payments as far back as November 2000.

 

Also in the Southern Hemisphere, Argentina's farmers had harvested 90% of the 2005-06 wheat crop by Saturday, the Buenos Aires Cereals Exchange.

 

As of Jan. 13, Argentina had sold 4.085 million metric tonnes of 2005-06 wheat, less than last year's 4.28 million tonnes, the Agriculture Secretariat reported Monday.

 

Meanwhile, Ukraine harvested 38 million metric tonnes of grain, including corn, in clean weight in 2005, 9.1% less than in 2004, according to state figures Tuesday.