January 27, 2006

 

US Wheat Review on Thursday: Up on iraq tender; US, CIS crops eyed

 

 

U.S. wheat futures ended higher Thursday, after Kansas City Board of Trade hard wheat rallied to new contract highs across the board on U.S. and eastern Europe new-crop worries, and reports that Iraq will tender Saturday for 1 million metric tonnes of optional origin wheat, brokers said.

 

"Seasonally, you tend to get a little push this time of year," one broker said. "It's also nearing month-end, when funds like to book profits, and they don't usually wait until the end of the month."

 

Weekly U.S. wheat export sales, at 375,000 tonnes for old-crop 2005-06 wheat and 54,100 tonnes for new crop, met traders' estimates, while U.S. hard spring wheat led weekly totals, supporting Minneapolis Grain Exchange futures, they noted.

 

Deferred U.S. hard wheat contracts were underpinned by worries about the U.S. HRW wheat, and Ukrainian and Russian wheat crops. About 15% of the winter wheat in the Commonwealth of Independent States lacked adequate snow cover to fully insulate the crop from the recent cold, according Earth Satellite's Cropcast.

 

Deferred CBOT December soft wheat was underpinned Thursday by index fund buying as traders eyed the upcoming launch of the new DB Commodity Index Tracking Fund (DBC) on the American Stock Exchange, they said.

 

CBOT March wheat ended up 2 1/2 cents at US$3.44 1/2; May ended up 3 cents at US$3.55 3/4 per bushel.

 

Commodity funds bought about 2,000 CBOT wheat contracts during Thursday's open outcry session, brokers said.

 

Deutsche Bank bought 800 December; ABN Amro bought 600 March; Calyon Financial bought 500 March; JP Morgan bought 500 December and sold 200 March; and Fimat bought 300 March.

 

Cash U.S. soft red winter wheat midday barge bids were steady Thursday, sources said.

 

In overnight U.S. wheat export news, Japan bought 80,000 tonnes of U.S. wheat in an overall tender for 121,000 tonnes. In global trade, Morocco bought 315,000 tonnes of European Union wheat.

 

Meanwhile, the European Union granting 375,000 tonnes of free-market wheat at EUR6.74/tonne lagged last week's 428,000 tonnes of wheat licenses that were granted at EUR6.74/tonne amid aggressive bids for 1.6 million tonnes of wheat.

 

The International Grains Council said Thursday that world wheat production will total 595 million metric tonnes in 2006-07, down 20 million tonnes from the previous season and largely due to expected Russian and Ukrainian crop losses.

 

 

Kansas City Board of Trade

 

KCBT March wheat closed Thursday up 4 1/2 cents at US$3.95 1/2 per bushel, after setting a contract high of US$3.96 1/2; May ended up 6 cents at US$3.98 1/2.

 

Man Financial was an early buyer of 150 March and 200 July; ADM, the Refco division of Man Financial and Fimat were early buyers of March; and Frontier Futures bought July, brokers said.

 

On the day, ADM Investor Services was a net buyer of 200 July and seller of 200 March; Frontier sold 180 March; ABN Amro sold 200 July; Man Financial bought 700 March and 400 July; Prudential Financial bought 200 March and 200 July; the Refco division of Man Financial bought 100 March and sold 150 July; and UBS bought 300 March, they said.

 

Spread trade was active, with Prudential Financial spreading 1,000 March/July; Fimat spread 3,000 July/March and 500 March/July; ABN Amro and ADM Investor Services each spread 300 March/May; and Fimat spread 200 March/May and 200 May/July, brokers said.

 

Thursday's gains were limited by farmer sales amid new contract highs, one KCBT broker said.

 

KCBT/CBOT March wheat spread settled Thursday at 51 cents, premium KCBT, widening during the session on concerns about tight HRW supplies versus SRW supplies after closing Wednesday at a one-week low of 49 cents, premium KCBT.

 

Kansas City spot cash railcar basis bids for 11% protein wheat fell 2 cents while bids for 12% to 14% protein were unchanged Thursday, according to the KCBT. Midday HRW Gulf spot basis bids fell 2 cents, cash sources said.

 

 

Minneapolis Grain Exchange

 

MGE March closed Thursday up 2 1/2 cents at US$3.99 1/4 after matching Wednesday's contract high of US$4.01. May wheat settled up 3 1/4 cents at US$4.03 1/4 per bushel after setting a new contract high of US$4.04. All other deferred traded contracts set contract highs.

 

U.S. hard red spring wheat export sales for the week ended Jan. 19 totaled nearly 149,000 metric tonnes, led by sales to the Philippines.

 

Cash U.S. spring wheat basis bids were mixed Thursday ahead of heavy movement, cash sources said.

 

Minneapolis rail receipts of wheat on Thursday totaled 183 cars versus last year's 36 cars. Durum receipts totaled 44 cars versus last year's 50 cars.