February 2, 2006

 

US Wheat Review on Wednesday: Ends weak on technicals, US exports

 

 

U.S. wheat futures ended lower Wednesday on technical sales and quiet U.S. wheat export news, led by losses in Kansas City Board of Trade as brokers awaited the opening of bids in an Iraqi optional-origin tender for 1 million metric tonnes of hard wheat, brokers said.

 

Pressure also stemmed from news about global wheat supplies, including a year-over-year build in Canadian wheat stocks to 24.14 million tonnes as of Dec. 31 and talk in India of a possible bumper wheat harvest, they noted.

 

Losses in Chicago Board of Trade corn and soybean futures amid improved Argentine crop weather also weighed on U.S. wheat futures, traders said.

 

"The lower close (in CBOT wheat) breaks a months-long pattern of the market closing higher on the first day of month," said Vic Lespinasse, an analyst for AG Edwards & Sons.

 

"The market's performance was disappointing," he added. "Funds sold, which sparked local selling; and there is growing concern about the U.S. share of any Iraqi purchase."

 

CBOT March wheat ended Wednesday down 4 cents at US$3.39 1/4 after falling below its key 200-day moving average of US$3.43 1/2 in a lingering retreat from last Friday's 3 1/2-month high of US$3.50; while May closed down 4 1/4 cents at US$3.50 1/4 per bushel.

 

Commodity funds were net sellers, led by sales of 500 March each by ABN Amro and Man Financial, brokers said. Fimat bought 1,000 March and 300 May, and Prudential Financial bought 400 March, brokers said.

 

Rolling of nearby CBOT March positions ahead of next week's expected Goldman Sachs index roll was not as active as Tuesday's roll; and Calyon Financial was a featured spreader Wednesday of 1,200 May/March, they noted.

 

Midday U.S. soft red winter wheat barge bids were steady Wednesday, cash sources said.

 

Thursday's market calls were expected to follow weekly export sales data; traders estimated weekly sales would total 300,000 million tonnes to 425,000 million tonnes.

 

In global wheat news, India's Prime Minister said the country is heading toward record wheat production this year and vowed the government would ensure prices of foodgrains remained under reasonable control. The previous record crop was 76.4 million tonnes set in 2000.

 

India's wheat stocks fell to about 6.3 million metric tonnes, as of Jan. 1, from 8.9 million tonnes last year, sparking speculation both that imports would be needed before the spring-time harvest. Government officials have denied that need for imports.

 

Meanwhile, the treasurer of AWB, a listed company that was for many years known as the Australian Wheat Board said Wednesday that he favors a relaxation of the monopoly while Agriculture Minister Peter McGauran also acknowledged it might be time to change export procedures. The news follows bribery allegations raised at a government inquiry into Iraqi sales during Saddam Hussein's regime.

 

At stake is AUS$4.5 billion (USUS$3.4 billion) in annual wheat exports, which along with U.S. grains are a major supplier to global markets.

 

 

Kansas City Board of Trade

 

KCBT March wheat closed Wednesday down 4 1/2 cents at US$3.93 per bushel, and May ended down 3 1/2 cents at US$3.97 1/2.

 

ABN Amro bought 300 March and sold 100 May; ADM sold 100 March, 500 July and 400 December; General Mills bought 300 July; Man Financial sold 200 March and 300 July; Prudential Financial bought 300 march, 600 May and 400 July; and UBS bought 200 March, 400 July and 300 December, brokers said.

 

The KCBT/CBOT March wheat spread settled Wednesday at 53 3/4 cents, premium KCBT, after closing Tuesday at 54 1/4 cents, premium KCBT.

 

Forecasts for improved chances of precipitation across the U.S. hard red winter wheat-growing belt during the 6-10-day period weighed on deferred KCBT contracts, but below-normal temperature outlooks prompted fears of potential winterkill for the HRW crop, brokers said.

 

Kansas City spot cash railcar basis bids for 11% to 14% protein wheat were unchanged Wednesday, according to the KCBT.

 

Midday spot U.S. HRW wheat barge bids were steady Wednesday, sources said.

 

 

Minneapolis Grain Exchange

 

MGE March closed Wednesday down 4 1/4 cents at US$3.92 1/4; and May closed down 3 1/4 cents at US$3.97.

 

Cash U.S. spring wheat basis bids were steady to 5 cents lower Wednesday, cash sources said.

 

Minneapolis rail receipts of wheat on Wednesday totaled 128 cars versus last year's 169 cars. Durum receipts totaled 58 cars versus last year's 3 cars.