April 28, 2006

 

US Wheat Review on Thursday: Lower on US human rights watch rain forecasts, china

 

 

U.S. wheat futures settled lower Thursday, led by losses in Kansas City Board of Trade hard red winter wheat futures on forecasts for good rains across Kansas into the weekend.

 

Kansas is the top U.S. winter wheat producer, and its hard red winter wheat crop is especially needed this year as crops in key producers Oklahoma and Texas are in dire straits because of drought.

 

"If anything, the midday weather forecasts are turning wetter," one KCBT wheat broker said. "Now, bonus rains for northwest Kansas are in the mix. We think 70%-80% coverage of Kansas at 1/2 inch or more."

 

Month-end trade and speculative fund profit-taking were also seen, with the latter credited to fears of a slowdown in China's economy due to rising interest rates, with the most pronounced liquidation seen in Kansas City, wheat brokers said Thursday.

 

Spreading was noted. Up to 1,000 deliveries were expected on Friday's first notice day against Chicago Board of Trade May wheat futures, and less than 200 deliveries were expected Friday against KCBT and Minneapolis Grain Exchange May wheat futures, U.S. wheat brokers added.

 

CBOT July settled Thursday down 6 cents at US$3.55 3/4, and May ended down 6 cents at US$3.42 1/2 per bushel.

 

Speculative funds were net sellers of about 5,000 contracts, brokers said.

 

Fimat sold a net 1,500 CBOT July wheat by 1:30 p.m. EDT, while Rand Financial sold a net 1,100 July, ABN Amro sold a net 900 July, Citigroup sold a net 800 July, the Refco division of Man Financial sold a net 700 July, JP Morgan bought 1,000 July and O'Connor and bought a net 1,700 July, brokers said.

 

CBOT wheat spread trade was modest ahead of Friday's first notice day against May wheat. JP Morgan spread 300 May/July, UBS spread 300 July/May and Tenco Inc. spread 200 July/May, brokers said.

 

In wheat options trade, Man bought 1,200 July US$3.90 calls and sold 600 July US$3.60 puts, they added.

 

Midday spot U.S. HRW and SRW Gulf barge bids were unchanged Thursday, cash sources said.

 

Weekly U.S. wheat export sales totaling 255,900 metric tonnes were nearer the low end of analysts' estimates for 200,000 to 500,000 tonnes, brokers said.

 

Net old-crop wheat sales of 164,200 metric tonnes were 22% below the previous week and 47% under the prior 4-week average, according to the U.S. Department of Agriculture.

 

In overnight wheat export news, Japan bought 103,400 tonnes of wheat including 63,400 tonnes of U.S. wheat.

 

In this week's E.U. free-market wheat tender, 61,000 tonnes of licenses were granted, with all but 1,000 tonnes from France, with a maximum refund of EUR5.00/tonne. Traders said the results of the tender were in line with expectations.

 

The International Grains Council on Thursday raised its forecast for the 2006-07 world wheat crop to 598 million tonnes, up 4 million from last month.

 

European crop prospects remain favorable, outside of some flooding in parts of Bulgaria and Romania, said the IGC. More rain will be needed to take the crop through to harvest, traders said, but also that conditions are mostly ideal.

 

Moreover, the USDA's attache said late Wednesday that India would likely import 6 million tonnes of wheat in 2006. Analysts and traders noted talk that the figure could trend toward 6 million.

 

Still, one U.S. wheat trader noted the U.S. wheat markets were so focused on HRW weather forecasts this week that the global news had little impact on trade.

 

 

Kansas City Board of Trade

 

KCBT July closed Thursday down 14 cents at US$4.31 3/4, after hitting a near 3-week low of US$4.30 1/2 per bushel.

 

Speculative sell stops were triggered early as bellwether July fell through its 50-day moving average of US$4.35 3/4, brokers said.

 

After the close, the 9-day Relative Strength Index of 41 for July wheat indicated neutral conditions. A 9-day RSI reading of 30 and below suggests oversold market conditions.

 

KCBT May wheat ended down 16 1/2 cents at US$4.22 1/4 per bushel.

 

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

 

 

Minneapolis Grain Exchange

 

MGE July settled down 10 1/2 cents at US$4.17 while MGE May wheat ended down 10 cents at US$4.07 per bushel.

 

Cash U.S. spring wheat basis bids were mixed Thursday, cash sources said. Minneapolis wheat receipts totaled 75 railcars versus last year's 258 railcars. There were 31 durum receipts versus 51 cars last year.

 

Traders continued to monitor U.S. spring wheat planting progress as rains of up to one inch were forecast for eastern North Dakota and northwestern Minnesota during the next two days, according to DTN Weather.

 

On Monday, the USDA reported only 20% of the U.S. spring wheat crop had been planted due to excessive precipitation in the Northern Plains, well behind last year's 37% and the average of 27%.