Februday 1, 2006

 

US Wheat Review on Tuesday: Weak on month-end, roll; MGE leads losses

 

 

U.S. wheat futures ended lower Tuesday, led by losses in Minneapolis Grain Exchange hard red spring wheat futures. Prudential Financial sold about 400 MGE March contracts following Monday's match of the contract high, commercials bear spread May/March and May/July, and good country spring wheat movement continued, brokers said.

 

"For the most part, (railcar) receipts at Minneapolis have been over 100 cars (every day)," one MGE broker noted.

 

"Since we've broken $3.90 in the March, we've seen producer selling pick up," he added. "The mills have really no incentive to pay up for anything. They kind of just wait for the market to come to them."

 

At the Chicago Board of Trade, soft red winter wheat futures ended lower as sell stops were hit following good recent fund buying, which sparked record open interest in CBOT wheat futures before Tuesday's open.

 

Active spreading of CBOT May/March wheat was seen after midday Tuesday while losses in neighboring soybean futures also weighed on CBOT wheat, brokers said.

 

Hard red winter wheat futures at the Kansas City Board of Trade fared best, closing just slightly lower on late market-on-close month-end positioning and as U.S. traders anticipated an opening of bids Wednesday for an Iraqi wheat tender of 1 million tonnes.

 

Fund sales of KCBT wheat were light Tuesday, while rolling out of March positions into the deferred May and July contracts was featured, KCBT brokers said.

 

A deterioration in Texas' winter wheat crop conditions and forecasts for colder temperatures next week in the U.S. HRW wheat belt underpinned deferred KCBT wheat, they noted.

 

CBOT March wheat ended Tuesday down 2 cents at $3.43 1/4; May ended down 1 1/2 cents at $3.54 1/2 per bushel.

 

Commodity funds bought were light net sellers, while spreading was noted, brokers said. Calyon Financial sold 500 March; Fimat sold 300 March; and Citigroup and Prudential Financial each bought 400 March, they said. ABN spread 1,500 May/March and Calyon Financial spread 1,000 May/March, they noted.

 

U.S. wheat export sales news was quiet, while traders awaited any news of possible sales of wheat to Iraq.

 

Meanwhile, Australian monopoly wheat exporter AWB Ltd. (AWB.AU) said Tuesday it tendered to supply 1 million metric tonnes of wheat in the latest Iraqi tender.

 

In other global wheat news, traders continued to eye extreme cold and worry about possible winterkill in Russia and Ukraine.

 

Kansas City Board of Trade

 

KCBT March wheat closed Tuesday down 3/4 cent at $3.97 1/2 per bushel, and May ended down 1/2 cent at $4.01.

 

KCBT/CBOT March wheat spread settled Tuesday at 54 1/4 cents, premium KCBT, after closing Friday at 53 cents, premium KCBT.

 

Refco was a noted outright seller of about 150 KCBT March, brokers said.

 

ABN Amro spread 500 March/May; Fimat spread 400 May/March; ADM Investor Services spread 400 March/July; UBS spread 400 July/March; and Prudential Financial spread 800 July/March, brokers said.

 

Early support in deferred KCBT contracts stemmed from Texas' report that the state's crop was 88% in poor to very poor shape, down 3 percentage points from the previous weeks, brokers said.

 

Kansas City spot cash railcar basis bids for 11% to 13% protein wheat were unchanged; spot bids for 14% protein rose 4 cents Tuesday, according to the KCBT.

 

Hutchinson deliverable hard red winter wheat stocks in exchange-approved elevators as of Jan. 27 dropped to 10.196 million bushels from the previous week's 10.584 million.

 

KCBT deliverable hard red winter wheat stocks fell to 5.404 million bushels as of Jan. 27 from the previous week's 5.509 million.

 

Midday spot U.S. HRW wheat barge bids were unchanged Tuesday, sources said.

 

Minneapolis Grain Exchange

 

MGE March closed Tuesday down 5 cents at $3.96 1/2 in a retreat from Monday's contract high of $4.04. May closed down 4 1/4 cents at $4.00 1/4.

 

Cash U.S. spring wheat basis bids were steady to 15 cents lower Tuesday, cash sources said.

 

Minneapolis rail receipts of wheat on Tuesday totaled 119 cars versus last year's 26 cars. Durum receipts totaled nine cars versus last year's 26 cars.