April 1, 2006

 

US Wheat Review on Friday: Higher on fewer corn, spring wheat acres

 

 

U.S. wheat futures settled higher Friday as a supportive prospective plantings report and spillover buying from sharply higher corn prices lifted futures, floor sources said.

 

The U.S. Department of Agriculture reported that winter wheat planted acreage was estimated at 41.404 million acres in 2006, almost 1 million acres higher than in 2005.

 

Spring wheat and durum wheat acres, however, declined to 13.899 million acres and 1.825 million acres, respectively. That's lower than the average analyst estimate of 14.113 million acres and 2.633 million acres and below 2005 acreage of 14.036 million spring wheat acres and 2.760 million acres devoted to durum wheat production.

 

The USDA also released quarterly stocks data as of March 1. Wheat stocks were estimated at 972 million bushels, in line with the average analyst estimate of 973 million bushels and slightly lower than 984 million a year earlier.

 

Acres devoted to corn production came in at 78.019 million acres, beneath the average analyst estimate of 80.576 million acres and well below 2005 seedings of 81.759 million acres.

 

Corn futures ended with sharp gains, with the May contract finishing 8 1/4 cents higher at US$2.36.

 

CBOT wheat futures followed corn futures higher on the lower acreage, a floor trader said.

 

The fewer acres in spring wheat futures provided strength to wheat futures in Minneapolis as well as Chicago, but the "Chicago market followed corn," a commercially connected trader said.

 

On technical charts, CBOT May wheat gapped open higher and settled above its 10-day moving average.

 

CBOT May wheat rose 3 1/4 cents to US$3.47 3/4 per bushel, and July finished up 4 1/4 to US$3.61 1/2.

 

In CBOT trades, ABN Amro bought 500 May, Fimat bought 500 May, Goldenberg-Hehmeyer bought 800 May, Man Financial bought 400 July and 100 May, JP Morgan bought 300 May, Prudential Financial bought 200 May, UBS bought 400 May and the Refco division of Man Financial bought 300 May.

 

O'Connor sold 1,500 May, Man Financial sold 500 May, JP Morgan sold 500 May and 400 July, ABN Amro sold 500 May and Fimat sold 200 September.

 

Commodity fund buying was estimated at 1,000 contracts.

 

 

Kansas City Board of Trade

 

KCBT wheat futures finished higher in moderate volume with much of the trading done on the opening and the close, a KCBT floor trader said.

 

Hard red winter wheat futures followed spring wheat futures higher, the floor trader said. Speculation that the spread between hard red futures and soft red futures could widen also provided thin support, he added. Light fund buying on the opening added to the firm tonnee as well, he noted.

 

On technical charts, May wheat gapped higher at the opening and finished at its highest level since March 17.

 

In midday KCBT trades, ADM Investor Services bought 400 July, Fimat bought 300 May and 200 July, Frontier Futures bought 200 July, and Prudential Financial bought 200 July.

 

ADM Investor Services sold 200 December and Man Financial sold 200 July.

 

KCBT May rallied 7 3/4 cents to US$4.18 1/2 per bushel, and July settled 7 1/4 cents higher to US$4.23.

 

 

Minneapolis Grain Exchange

 

Lower-than-anticipated spring and durum wheat acre intentions pushed MGE spring wheat futures higher, an MGE floor trader said. Some traders don't necessarily agree with the intentions figure, "but you've got to trade the numbers in front of you," the floor trader said.

 

Spring wheat planting conditions are favorable, and alternative crops don't offer an attractive return right now, the trader noted.

 

Light speculative and commission house buying added to the gains, sources said.

 

On technical charts, MGE May wheat gapped higher at the opening, and finished at its highest level since March 22.

 

MGE May wheat finished 6 cents higher at US$4.04 1/4, and July settled 6 3/4 cents higher at US$4.10.

 

Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the commitment of trader's data for the period ending March 28.

 

On Monday, the USDA is scheduled to release the weekly export inspections at 10:00 a.m. CDT, and on Monday afternoon, the USDA will release the weekly crop progress report.

 

With recent light precipitation in Kansas, speculation is for wheat crop conditions to show some slight improvement in crop ratings versus a week ago in some states in the U.S. Central Plains, a KCBT trader said.