June 13, 2006

 

US Wheat Review on Monday: Up on technical rebound; spreads noted

 

 

U.S. wheat futures ended firm Monday, but just above the session's lows, on a technical rebound from Friday's losses and following gains in Chicago Board of Trade soybean and corn futures, brokers said.

 

Signs of global wheat demand, including India's tender for 2.2 million tonnes of wheat and talk of possible Iraqi buying interest, underpinned U.S. wheat futures, they noted.

 

Still, U.S. winter wheat harvest pressure limited gains.

 

Moreover, U.S. weekly wheat export inspections of 12.665 million bushels were at the low end of analysts' estimates.

 

CBOT July wheat ended up 1 1/4 cents at US$3.73 3/4 per bushel.

 

Speculative funds bought 1,000 contracts by 1330 EDT brokers said. CBOT wheat/corn spreads were also noted.

 

CBOT wheat spread trade was featured JP Morgan spreading 1,000 September/July, Rosenthal Collins spreading 500 September/July and 500 July/September, and ADM spreading 500 July/March.

 

Rolling of July positions backward is expected to continue Tuesday ahead of the June 30 first notice day for deliveries against all U.S. July wheat futures contracts, brokers said.

 

Midday spot U.S. HRW Gulf FOB barge bids were unchanged Monday while spot SRW Gulf CIF barge bids rose 5 cents, cash sources said.

 

In wheat export news, India tendered Monday to buy 2.2 million tonnes of wheat for shipment between September 2006 and January 2007. Traders noted the tender included some relaxation in specifications, including acceptance of some cargoes with weeds whose entry was previously banned. In its last tender, India was only able to secure 800,000 tonnes, about 27% of its original 3-metric-tonne tender.

 

In other global wheat news, French new crop cash wheat and futures prices rose Monday following hot, dry weekend weather while the crops are in a key grain-filling stage. A recovery in U.S. wheat prices was also noted.

 

Traders also eyed planting reports from Argentina and Australia.

 

Farmers in Argentina had planted almost 19% of the 2006-07 wheat crop by Saturday, the Buenos Aires Cereals Exchange reported Monday. The Exchange expects planted area to total 5.7 million hectares, up from last year's 5.2 million hectares but well below earlier estimates due to a lingering drought.

 

In 2005-06 Argentina produced 12 million tonnes of wheat, down from the previous year's 16.345 million tonnes.

 

The USDA has forecast Argentina's 2006-07 wheat crop at 14.3 million tonnes.

 

In Australia, good weekend rains at the outer edge of the key exporter's wheat planting season following a lengthy dry spell.

 

 

Kansas City Board of Trade

 

KCBT July wheat closed up 1/2 cent at US$4.79 1/2 per bushel.

 

Fimat was a noted spreader of at least 3,000 to 4,000 KCBT September/July futures by 1315 EDT.

 

Kansas winter wheat producers noted Monday in the daily Kansas Wheat Harvest Report that cutting had picked up in some locations late last week.

 

Kansas is the top U.S. winter wheat-producing state.

 

The U.S. Department of Agriculture forecast on Friday that farmers in Kansas will harvest 291.4 million bushels of winter wheat this year, down from a government estimate in May of 319.6 million bushels.

 

Kansas farmers produced 380 million bushels of winter wheat last year.

 

 

Minneapolis Grain Exchange

 

MGE July wheat settled up 4 1/4 cents at US$4.49 3/4 per bushel.

 

Cash U.S. spring wheat basis bids were steady to firm Monday, cash sources said. Minneapolis wheat receipts totaled 120 railcars versus last year's 122 railcars. There were 13 durum receipts versus 3 cars last year.

 

Traders awaited the USDA's weekly U.S. crop progress report, scheduled to be released at 3 p.m. CDT Monday, for U.S. spring wheat condition ratings and winter wheat harvest progress.