April 25, 2006

 

US Wheat Review on Monday: Weak on specs, improved US wheat weather

 

 

U.S. wheat futures ended mostly weak Monday on late speculative sales, losses in Chicago Board of Trade corn futures and improved weather forecasts this week for U.S. spring wheat and hard red winter wheat, brokers said.

 

Light rain began overnight in Kansas, the top U.S. hard red winter wheat- producing state, and moved into Nebraska on Monday, brokers said. Moreover, the early-week rains and showers expected at the end of the week were expected to total up to 2 inches, a substantial amount for the maturing crop.

 

Weak crude oil and precious metal futures also weighed on wheat Monday, but the dollar also broke sharply, a supportive element for U.S. wheat exports.

 

"We were just kind of a dog at the end (of the open outcry session)," one MGE wheat trader said. "We didn't see any buying coming into the pit at all. We just couldn't recover after we got lower on the day."

 

In Chicago, several traders said they were surprised U.S. wheat futures had traded higher at all on Monday, given the improved U.S. Northern and Southern Plains wheat weather.

 

"I guess it was just CBOT wheat's turn to cover shorts today," one CBOT wheat broker said.

 

Short-term speculative funds were thought to be net short about 12,100 CBOT wheat futures before Monday's open-outcry opening bell.

 

CBOT July wheat ended Monday down 1 3/4 cents at US$3.63 1/2, just above the 100-day moving average of US$3.62 1/2; while May wheat ended down 2 cents at 43.50 3/4.

 

Speculative funds were net about net even on the day after buying 1,300 CBOT wheat futures by 12:30 CDT, brokers said. Iowa Grain sold 300 July late while Rand Financial was a late seller after buying 600 July. ABN Amro bought a net 1,000 July, brokers said.

 

CBOT wheat spread trade was modest ahead of Friday's first notice day for deliveries against nearby May. Goldenberg Hehmeyer spread 300 September/July, ADM spread 300 March/December and Tenco Inc. spread 200 March/December, brokers said.

 

"The market seems tired," one CBOT wheat broker said. "Friday's news about India (buying 3 million tonnes in 2006) was maybe a little supportive then, but seemed not to be a factor today. And people realize that Kansas' wheat crop could be helped if late-week rains occur."

 

Midday spot U.S. HRW barge bids were unchanged while SRW Gulf barge bids were rose 1 cent Monday, cash sources said.

 

The U.S. Department of Agriculture reported weekly U.S. wheat export inspections totaled 19.107 million bushels, at the high end of traders' expectations and above last week's 9.996 million bushels.

 

In global wheat news, European cash wheat prices were mostly steady Monday after last week's gains amid a strengthening euro.

 

Turkey said late Friday it had sold 30,000 metric tonnes of red milling wheat and 65,000 tonnes of durum wheat in an export tender.

 

Argentina's Agriculture Secretariat said the country's farmers had sold 5.83 million metric tonnes of 2005-06 wheat by Friday, less than the 8.515 million tonnes of 2004-05 wheat sold by the same time last year.

 

U.S. wheat futures traders expected the USDA would report late Monday that U.S. winter wheat conditions slipped 1-2 percentage points from last week's 39% in good to excellent and that U.S. spring wheat plantings were 15-20% complete.