April 22, 2006

 

US Wheat Review on Friday: Lower on US human rights watch rain forecasts, specs

 

 

U.S. wheat futures ended weak Friday on speculative sales and forecasts for rains next week, both early and late, in key U.S. HRW wheat states Kansas and Nebraska, brokers said.

 

"Nobody wants to be long wheat going into this weekend remembering what happened last week, especially with some of the weather gurus looking for a possible 60%-40% chance for a substantial rain - maybe up to an inch of rain in the Kansas/Nebraska area," said Tim Hannagan, a senior grain analyst at Alaron Trading, early Friday.

 

"We know Texas and Oklahoma are in really bad shape coming out of the winter," Hannagan added. "The drought has been really devastating to the crop. I don't think people believe that it can get much better from here. But the Kansas and Nebraska wheat crops can still be saved. And of course Kansas is the No. 1 wheat producing state in the United States."

 

That sentiment proved to be key throughout Friday's open-outcry session, with the U.S. wheat markets opening lower even amid late-breaking news that India intended to import 3 million tonnes of wheat during 2006.

 

Chicago Board of Trade July wheat ended down 1 cent at US$3.65 1/4 per bushel while May closed down 1/4 cent at US$3.52 3/4.

 

Speculative funds were about even on the day after selling early, brokers said.

 

ABN Amro bought about 1,500 July late after selling 800 July earlier, they said. R.J. O'Brien bought 600 July late while Rosenthal Collins bought 600 July. Fimat sold a net 800 July, UBS bought a net 700 July and Deutsche Bank bought a net 400 December.

 

CBOT wheat spread trade was moderate ahead of April 28's first notice day for deliveries against CBOT May wheat.

 

Advantage spread 1,500 September/July, ADM spread 600 July/September, 600 July/December and 300 March/December, they noted.

 

The three U.S. May wheat option contracts expired Friday.

 

Midday spot U.S. HRW Gulf barge bids were unchanged at midday Friday while spot SRW barge bids fell 2 cents per bushel, cash sources said.

 

Traders noted Canada would release its planting intentions report on Tuesday.

 

"Trade sources are anticipating an increase in wheat acres and a decrease in canola acres," noted Bill Nelson, a grain analyst at AG Edwards. "Spring plantings have begun in the provinces. There are concerns about too wet soils in Manitoba that could slow activity there."

 

Slow Ukranian spring wheat plantings were also noted, with only 3.62 million acres planted as of April 19 versus 4.87 million last year.

 

"Recall that it had lots of winterkill, so in theory it needs to be planting even more land," Nelson said.

 

In other global wheat news, the head of an Australian grain growers group said high wheat prices could prompt Australian farmers to plant enough wheat this year to reap 24 million metric tonnes.

 

The U.S. Department of Agriculture last forecast an Australian wheat crop of 24 million tonnes and the Australian Bureau of Agricultural & Resource Economics predicts a crop totaling 24.5 million tonnes versus last year's 25.1 million tonnes.

 

 

Kansas City Board of Trade

 

KCBT July hard red winter wheat settled down 6 1/4 cents at US$4.44 1/4 Friday while KCBT May closed down 7 1/2 cents at US$4.37 1/2 per bushel.

 

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

 

In KCBT exchange news, a membership sold Thursday for a record-breaking US$200,000, topping the previous record of US$192,000 set on April 12 of this year, the exchange said Friday.

 

The KCBT has set volume records for every month thus far in 2006. With six trading days left during April, an unofficial record has already been set for the calendar month, the exchange added.

 

 

Minneapolis Grain Exchange

 

MGE July wheat settled down 5 cents at US$4.27 1/4 while May wheat ended down 6 1/4 cents at US$4.18 3.4.

 

Cash spring wheat basis bids were steady to 10 cents higher Friday, cash sources said. Friday's Minneapolis wheat receipts totaled 99 railcars versus last year's 140 railcars. There was 1 durum receipt versus last year's zero.