January 31, 2006

 

US Wheat Review on Monday: Ends higher on Iraq hopes, US weather

 

 

U.S. wheat futures ended higher Monday, led by gains in Kansas City Board of Trade hard red winter wheat futures on hopes that the U.S. will garner a major share of Iraqi tender for 1 million tonnes hard wheat; strong U.S. weekly wheat export inspections; and reduced rain forecasts for dry U.S. HRW wheat fields, brokers said.

 

Chicago Board of Trade soft red winter wheat futures were underpinned Monday by fund buying, including late buying by Deutsche Bank of 1,000 CBOT December wheat futures, and a rally in neighboring soybean futures, brokers said.

 

Deutsche Bank (DB) announced Jan. 17 the coming launch of the DB Commodity Index Tracking Fund (DBC), which will list on AMEX (AMEX: DBC). The commodity-index-linked fund is the first to be listed on a U.S. stock exchange and was designed to offer investors access to the Deutsche Bank Liquid Commodity Index - Excess Return (DBLCI), the bank said.

 

CBOT March wheat ended Monday up 1 3/4 cents at $3.45 1/4; May ended up 1 1/4 cents at $3.56 per bushel.

 

Commodity funds bought about 3,000 CBOT wheat contracts, brokers said. Fimat Futures sold 1,500 March and 1,000 July while ABN Amro and Calyon Financial each bought 1,000 March, they said.

 

Cash U.S. soft red winter wheat midday barge bids fell 5 cents per bushel Monday, sources said.

 

U.S. weekly wheat export inspections totaled 23.401 million bushels in the week ended Jan. 26, above analysts' estimates for 15 million to 21 million and last week's 19.212 million bushels, the U.S. Department of Agriculture reported Monday. HRW weekly wheat inspections led other classes, while 3.535 million bushels were inspected for Iraq.

 

In global wheat news, Argentine farmers will likely harvest 12.01 million metric tonnes of 2005-06 wheat, the Buenos Aires Cereals Exchange forecast Monday.

 

The forecast, which is based on higher-than-expected yields in key production areas, puts production up about 200,000 tonnes from the previous estimate of 11.8 million tonnes.

 

Meanwhile, Argentina's Agriculture Secretariat reported late Friday that Argentina's year-on-year wheat exports fell nearly 55% during December, down for a seventh consecutive month.

 

Sales were down largely because of heavy buying early last year amid Argentina's record 2004-05 harvest, Secretariat officials say. Some clients loaded up on wheat earlier and now have less need to import; moreover, Argentina has less wheat to sell. This season's crop is estimated at 12 million tonnes, down from about 16 million the previous season.

 

As of Jan. 27, Argentina had sold 4.12 million metric tonnes of 2005-06 wheat; by this time last year Argentina had sold 5.7 million tonnes of 2004-05 wheat.

 

The USDA noted Monday that the current lack of snow cover in China's Yellow River basin is not unusual, but could become a problem if extremely cold weather moves into the region.

 

China's Ministry of Agriculture forecasts winter wheat area for 2006-07, up slightly from last year at 21.47 million hectares. The preliminary area estimate from the National Bureau of Statistics was somewhat lower at 21.1 million hectares, about the same as last year. The first USDA estimate of China's 2006-07 wheat area and production will be announced in May 2006.

 

Kansas City Board of Trade

 

KCBT March wheat closed Monday up 4 1/2 cents at $3.98 1/4 per bushel; and May ended up 3 cents at $4.01 1/2.

 

KCBT/CBOT March wheat spread settled Monday at 53 cents, premium KCBT, after closing Friday at 50 1/4 cents, premium KCBT.

 

ADM Investor Services bought 200 March and 200 July while selling 100 May; Frontier Futures sold 400 March; ABN Amro bought 300 March and 50 July; FC Stonnee sold 100 May and 100 July while buying 100 December; Man Financial bought 600 March and 100 May; the Refco division of Man Financial bought 650 March and sold 350 July; Term Commodities sold 100 March; and UBS bought 300 July and 150 December while selling 200 March, brokers said.

 

Kansas City spot cash railcar basis bids for 11% protein fell 4 cents; bids for 12% protein wheat fell 6 cents; bids for 13% fell 4 cents; and bids for 14% protein were unchanged Monday, according to the KCBT.

 

Midday spot barge bids were steady Monday while February bids fell 5 cents, sources said.

 

Minneapolis Grain Exchange

 

MGE March closed Monday up 1 3/4 cents at $4.01 1/2 after matching its contract high of $4.04; and May closed up 1/2 cent at $4.04 1/2 after matching last week's contract high of $4.07.

 

Intra-market spreading supported MGE wheat versus the other two wheat futures markets while farmer sales limited gains, a MGE wheat broker said.

 

Cash U.S. spring wheat basis bids were steady to lower Monday, cash sources said.

 

Minneapolis rail receipts of wheat on Monday totaled 125 cars versus last year's 46 cars. Durum receipts totaled 24 cars versus last year's 24 cars.