June 10, 2006

 

US Wheat Review on Friday: Ends lower; CBOT wheat leads lossses

 

 

U.S. wheat futures ended lower Friday, led by losses in Chicago Board of Trade soft red winter wheat on speculative sales amid ample U.S. SRW wheat supplies, brokers said.

 

Kansas City Board of Trade hard red winter wheat futures followed CBOT wheat lower after early firm trade following the U.S. Department of Agriculture's forecast of a 2006 U.S. HRW wheat crop of 659 million bushels, below analysts' pre-report estimates of 690 million bushels, they added.

 

For Friday's report, the USDA resurveyed farmers in the key wheat producing states of Kansas, Oklahoma, and Texas about their 2006 wheat acreage following a lingering drought. Accordingly, Kansas' winter wheat crop this year was seen at 291.4 million bushels, below the USDA's May estimate of 319.6 million.

 

The USDA on Friday forecast U.S. 2006 all-winter wheat production at 1.264 billion bushels, below the analysts' estimate of 1.299 billion bushels.

 

The average 2006 U.S. winter wheat yield was forecast at 40.5 bushels per acre, a 1.9-bushel decrease from a month ago.

 

The USDA forecast U.S. 2006 soft red winter wheat production at 357.3 million bushels, just about matching analysts' estimates, 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 248 million bushels, below the USDA's May estimate of 252 million and below the 2005 U.S. production tally of 260 million bushels.

 

The USDA put 2006 U.S. total wheat production at 1.814 billion bushels, compared with the average analyst estimate of 1.859 billion bushels and the USDA May estimate of 1.873 billion. The 2005 tally was 2.105 billion bushels.

 

The 2006-07 U.S. wheat carryout forecast was lowered to 416 million bushels, 31 million bushels less than was predicted a month ago.

 

Rolling of July wheat futures positions into September ahead of the June 30 first notice day for deliveries against July was also noted Friday, brokers said..

 

CBOT July wheat ended down 11 cents at US$3.72 1/2 a bushel after hitting a 4-1/2-week low of US$3.71.

 

Speculative funds sold about 6,500 contracts by 1330 EDT, brokers said.

 

CBOT wheat spread trade was active, with O'Connor and Co. spreading 2,000 July/September and JP Morgan and UBS each spreading 1,000 July/September.

 

Midday spot U.S. HRW Gulf barge bids were flat Friday while spot SRW bids fell 7 cents, cash sources said.

 

In global wheat news, European Union cash wheat prices were flat to lower Friday following losses in CBOT wheat. Traders noted the USDA on Friday raised its European Union 2006-07 crop forecast by 500,000 tonnes to 126.0 million tonnes.

 

The USDA also increased Friday its 2006 E.U. feed use estimate by 500,000 to keep the E.U. wheat ending stock forecast unchanged.

 

 

Kansas City Board of Trade

 

KCBT July wheat closed Friday down 5 cents at US$4.79.

 

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

 

Kansas wheat producers noted in Day 5 of the Kansas Wheat Harvest Report that the harvest was advancing amid hot, dry weather.

 

The Kansas Wheat Harvest Report is a daily newsletter produced by the Kansas Wheat Commission and the Kansas Association of Wheat Growers during the annual wheat harvest in the top U.S. winter wheat producing state.

 

 

Minneapolis Grain Exchange

 

MGE July wheat settled down 7 1/2 cents at US$4.45 1/2.

 

Cash spring wheat basis bids were steady to 10 cents higher Friday, cash sources said. Friday's Minneapolis wheat receipts totaled 164 railcars versus last year's 195 railcars. There were 23 durum receipts versus last year's three cars.