April 21, 2006

 

US Wheat Review on Thursday: Ends mixed; US hard wheat weather key

 

 

U.S. wheat futures ended mixed Thursday, underpinned by gains in Minneapolis Grain Exchange spring wheat futures amid a supportive supply/demand picture and building concerns about planting delays due to wet Northern Plains weather, brokers said.

 

"It's early, but the next four weeks are important for spring wheat plantings," said Randy Mittelstaedt, a grain analyst at R.J. O'Brien. "You can plant late, but that window (for U.S. spring wheat) of 50-60% planted is typically in the next four weeks."

 

Kansas City Board of Trade hard red winter wheat futures settled mixed Thursday after trading both sides on conflicting early weather forecasts and midday outlooks that lessened the chance of rain in key areas, Mittelstaedt said.

 

"It's a weather market and we'll see this for the next several weeks," he said. "Given the (HRW) acreage situation, it's to be expected."

 

Thursday's profit-taking losses in silver and gold added pressure, while some traders noted concerns about this week's dollar weakness, despite Thursday's dollar rebound.

 

Spreads were featured Thursday in Chicago Board of Trade soft red winter wheat futures trade, with CBOT July wheat ending down 1 1/2 cents at US$3.66 1/4. May settled down 1 3/4 cents at US$3.53 per bushel.

 

Fimat Futures spread 4,000 September/July, Calyon Financial spread 2,000 September/July, ADM spread 1,200 July/September, Rand Financial spread 500 July/September, Tenco Inc. spread 600 July/September and Merrill Lynch spread 500 December/July, brokers said.

 

One wheat trader noted that buying of deferred CBOT wheat contracts was accentuated this year, in line with the general theme of investors wanting to buy and hold commodities for the longer term.

 

"We listed December 2008 (wheat) contract this week (Tuesday), well ahead of usual," another trader noted. "There may be some (buying) interest in laying off risk versus corn."

 

First notice day for deliveries against the three U.S. May wheat futures contacts is April 28.

 

Speculative funds sold 2,500 CBOT wheat by 13:30 EDT, brokers said. Man Financial sold 300 July and 500 May while Rand Financial sold 400 July, they added.

 

Midday spot U.S. HRW Gulf barge bids were unchanged while spot SRW bids rose 2 cents Thursday, cash sources said.

 

U.S. weekly wheat export sales totaled 392,000 metric tonnes for old- and new-crop, compared with estimates of 250,000 to 350,000 metric tonnes, traders noted.

 

Net weekly U.S. wheat export sales of 210,800 metric tonnes were 18% below the previous week and 43% under the prior four-week average, according to the U.S. Department of Agriculture. The main buyers were Japan (60,900 metric tonnes), Taiwan (41,900 tonnes), Venezuela (34,700 tonnes) and Mexico (31,900 tonnes).

 

Europe on Thursday granted 105,000 tonnes of wheat in the European Union grain tender at a maximum refund of EUR5.00/tonne. This quantity and price were up from the previous tender issued just before Easter when 91,000 tonnes had been granted at a maximum refund of EUR4.00/tonne.

 

Traders said this week's E.U. restitution was expected due to the recent sharp drop in the U.S. dollar.

 

In global wheat news, Morocco bought 95,000 tonnes of European soft wheat and Japan bought 101,000 tonnes of wheat for June 1-30 shipment, including 40,000 tonnes of U.S. wheat.

 

 

Kansas City Board of Trade

 

KCBT July hard red winter wheat settled down 1/2 cent at US$4.50 1/2 while KCBT May closed down 1 3/4 cents at US$4.45.

 

"Conflicting early U.S. (HRW) weather forecasts caused some uncertainty and choppy trade," one wheat broker said, while others focused on an early forecast for less rain next week in western Kansas, a key production area.

 

Spot cash 11% through 14% U.S. hard red wheat basis bids were unchanged Thursday, according to the KCBT.

 

 

Minneapolis Grain Exchange

 

MGE July wheat ended up 1 3/4 cents at US$4.32 1/4 while May wheat ended up 2 cents at US$4.25 per bushel after trading both sides of the market during Thursday's open-outcry session.

 

Traders noted Northern Plains weather concerns again played a role.

 

The National Weather Service reported Thursday river flood warnings for the Northern Red River Vally and harzardous weather outlooks for parts of eastern North Dakota and west central and Northwest Minnesota.

 

The USDA reported Monday that 10% of the U.S. spring wheat crop had been planted as of April 16, behind last year's 21% and the five-year average of 16%.

 

Cash spring wheat basis bids were steady Thursday, cash sources said. Thursday's Minneapolis wheat receipts totaled 27 railcars versus last year's 88 railcars. There were 25 durum receipts versus last year's 5 cars.