March 9, 2006

 

US Wheat Review on Wednesday: Higher on weather concerns, funds

 

 

U.S. wheat futures settled higher Wednesday as fund buying and firm hard red wheat futures in Kansas City helped underpin values in both Chicago and Minneapolis, a floor source said.

 

Weaker soybean and corn values exerted little influence over wheat futures in Chicago as the market focused on rainfall prospects in the hard red winter wheat belt, he added.

 

Scattered showers are forecast for the U.S. Central Plains Wednesday and into Thursday, with the heavier amounts expected in the eastern sections of the region, DTN Meteorlogix weather said.

 

A chance for light precipitation was possible in northwest Kansas, southeastern Colorado and southern Nebraska, with amounts averaging .10-.30 inch. The rest of the region could see light showers or sprinkles, Meteorlogix said.

 

Kansas City was telling Chicago that the rain in the U.S. Central Plains isn't hitting any key areas, and futures in Chicago rallied in sympathy, an analyst said.

 

Despite the lack of other fresh news, fund buying helped support futures in an otherwise featureless session, he added.

 

Forecasts calling for good precipitation in parts of the U.S. soft red winter wheat belt had little impact, a floor analyst said.

 

DTN Meteorlogix weather forecast up to 2 inches of rain could develop in the Midwest east of the Mississippi river where the majority of the U.S. soft red wheat crop is grown.

 

Light fund buying helped support prices with fund buying estimated at 6,000 contracts Wednesday.

 

News from the Iraqi Grain Board that it was seeking to buy 500,000 metric tonnes of Australian wheat, but not from Australia's monopoly wheat exporter AWB (AWB.AU), had little market impact, with several traders noting this was expected.

 

CBOT March wheat settled 5 1/2 cents higher to US$3.76 per bushel. May wheat gained 3 1/2 cent to US$3.84 1/2 cents, and July rose 3 3/4 cents higher to US$3.95 3/4.

 

In CBOT trades, Prudential Financial bought 500 May, Fimat bought 400 May, JP Morgan bought 300 May, R.J. O' Brien bought 300 May and 300 July and Calyon Financial bought 100 July.

 

Fimat sold 200 May and 200 December, Goldenberg-Hehmeyer sold 100 May, JP Morgan sold 200 May, and Calyon Financial sold 200 May.

 

 

Kansas City Board of Trade

 

KCBT wheat futures ended higher Wednesday in very light trading as "it remains a weather market," a KCBT floor trader said. Although rainfall coverage is expected across 60-70% of the hard red wheat belt, only very light amounts are expected, and it looks like the rain is missing a of hard red wheat acres, the trader added.

 

KCBT March rose 6 cents to US$4.39 per bushel with May gaining 4 3/4 cents to US$4.43 1/2, and July up 6 1/4 cents to US$4.48 1/4.

 

In KCBT trades, ABN Amro bought 200 July and 200 December, Country Hedging bought 200 May and 100 July and Frontier Futures, bought 200 May and 100 July.

 

Frontier futures sold 100 May and 200 July, ABN Amro sold 300 May, Country Hedging sold 200 May and Man Financial sold 100 May, 200 July, and 100 December.

 

In spread trading Man Financial bought 600 July-May.

 

 

Minneapolis Grain Exchange

 

Spring wheat futures finished higher as the market continues to act as a follower to hard wheat futures, an MGE floor trader said.

 

MGE March wheat rose 7 cents to US$4.30, May ended 5 cents higher to US$4.29 3/4, and July rose 3 1/4 cents to US$4.35.

 

Minneapolis grain receipts totaled 119 cars of wheat and 24 of durum versus 94 cars of wheat and 7 train cars of durum a year ago.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the week ended Mar. 3. Analysts expect weekly export sales between 200,000-400,000 metric tonnes. Sales totaled 177,500 metric tonnes for the week ended Feb. 23.