June 9, 2006

 

US Wheat Review on Thursday: Settles lower; USDA data awaited

 

 

U.S. wheat futures ended lower Thursday on losses in outside commodity markets amid dollar strength, seasonal weakness and U.S. winter wheat harvest pressure, brokers said.

 

Fresh Iraq and India wheat tender news and evening of positions ahead of Friday's USDA 2006 U.S. wheat production and ending stocks reports limited losses, they added.

 

"There are reports that Iraq re-issued a wheat tender, and that the Iraqi ministry said it wanted to import 1.5 million tonnes," a CBOT source said.

 

Iraq is a key buyer of U.S. hard red winter wheat, the class of U.S. wheat that was damaged by drought this year.

 

There were also newswire reports that India's Agriculture Minister said India may tender as soon as this week to buy 2.3 million tonnes of wheat.

 

U.S. 2006-07 wheat export sales for the week ended June 1 of 320,500 tonnes met expectations, brokers said.

 

There were also sales for the 2005/06 season, which ended May 31, of 16,900 tonnes; the USDA also said 866,400 tonnes in old-crop sales were carried over to the 2006/07 crop year.

 

CBOT July wheat ended down 4 1/4 cents at US$3.83 1/2, with support holding at Wednesday's 4-week low of US$3.80.

 

Speculative funds sold 1,000 contracts by 1330 EDT, brokers said.

 

CBOT wheat spread trade was modest, with ADM spreading 1,000 September/July.

 

First notice day for deliveries against the three U.S July wheat contracts is June 30.

 

In Chicago, July is the last month to deliver CBOT SRW wheat with five parts per million vomitoxin, brokers noted. New CBOT delivery specifications, effective with the September delivery cycle, reduce the level of vomitoxin a taker of wheat can request at load-out from five parts per million to four parts per million.

 

Vomitoxin, or deoxynivalenol, a product of Fusarium graminearum, or head scab, can make humans and animals ill.

 

Midday spot U.S. HRW Gulf barge bids were flat Thursday while midday spot U.S. SRW bids fell 2 cents, cash sources said.

 

In global wheat news, the European Union's free-market wheat tender, licenses totaled 3,000 tonnes with a maximum refund tender of EUR6.00/tonne. There was a total of 134,143 tonnes of intervention wheat granted for export, of which 101,200 tonnes was from Germany.

 

Friday's USDA wheat data is keenly awaited, particularly as the government has said that it will resurvey farmers in the key wheat growing states of Kansas, Oklahoma, and Texas as to 2006 wheat acreage for this report following a lingering drought.

 

The average analyst estimate for U.S. total wheat production was 1.859 billion bushels, less than the USDA May estimate of 1.873 billion and well below the 2005 production tally of 2.105 billion bushels.

 

U.S. 2006 all-winter wheat production was seen at 1.299 billion bushels, with estimates ranging from 1.270 billion to 1.335 billion bushels. The USDA May estimate for 2006 all-winter wheat production was 1.323 billion bushels while 2005 U.S. all-winter wheat production totaled 1.499 billion bushels.

 

Analysts expected the USDA to report U.S. hard red winter wheat production of 690 million bushels, below the USDA May estimate of 715 million bushels and well below last year's 930 million bushels.

 

U.S. 2006 soft red winter wheat production was seen at 358 million bushels, above the USDA's May estimate of 356 million and well above last year's crop of 309 million bushels.

 

U.S. 2006 white wheat production was seen at 250 million bushels, just below the USDA's May estimate of 252 million and below the 2005 U.S. production tally of 260 million bushels.

 

 

Kansas City Board of Trade

 

KCBT July wheat closed down 3 cents at US$4.84.

 

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

 

 

Minneapolis Grain Exchange

 

MGE July wheat settled down 5 1/4 cents at US$4.53 per bushel.

 

Traders said forecasts called for a continuation of good spring wheat growing weather.

 

DTN Weather at midday Thursday forecast scattered to widely scattered showers and thunderstorms through Saturday. Rainfall totals of 0.25-0.75 inch, with locally heavier amounts, were expected.

 

Dry conditions or just a few light showers were forecast for Sunday and Monday. Scattered showers and thunderstorms of 0.25-0.75 inch were expected in the western spring wheat belt on Tuesday and Wednesday, while dry conditions or just a few light showers were seen in the east. Temperatures were expected to be near to below-normal levels.

 

The 6- to 10-day outlook called for near to above- normal temperatures, near to below-normal rainfall in the north, and near to above-normal rainfall in the south.

 

Cash spring wheat basis bids were steady to 5 cents lower Thursday, cash sources said. Minneapolis wheat receipts totaled 162 railcars versus last year's 103 railcars. There were 21 durum receipts.