June 15, 2006

 

US Wheat Review on Wednesday: Ends weak on technical sales, US harvest

 

 

U.S. wheat ended lower Wednesday on technical sales and U.S. winter wheat harvest pressure, brokers said.

 

Spreading was active ahead of the June 30 first notice day for deliveries against the three U.S. July wheat futures contracts, they added.

 

There was little impact from reports that the head of Iraq's grain board told London conferees that Iraq would look to additional European countries for wheat after buying wheat from Germany earlier this year, they said.

 

Iraq is a key U.S. hard wheat customer and U.S. wheat traders await any possible tender news.

 

CBOT July wheat ended Wednesday down 8 1/2 cents at US$3.61 1/4 a bushel after falling through its 200-day moving average at US$3.63 3/4 to a five-week low of US$3.60.

 

Speculative funds were net sellers after selling 400 contracts by 1330 EDT, brokers said.

 

O'Connor and Fimat were late sellers while Calyon Financial sold 700 CBOT July wheat earlier, they noted.

 

"Volume was not very heavy today," one CBOT broker said.

 

CBOT wheat spread trade was again noted, with Fimat spreading 2,000 December/July and O'Connor spreading 1,000 September/July, they added.

 

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.

 

Vomitoxin, a product of Fusarium graminearum, or head scab, can sicken humans and animals.

 

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.

 

CBOT traders said they awaited word from the exchange as to how much it would cost to upgrade receipts amid the change in vomitoxin specifications.

 

"Not knowing how much it will cost makes trading the spread very difficult," a CBOT wheat broker said.

 

Midday spot U.S. SRW Gulf CIF bids were up 1 cent Wednesday, cash sources said.

 

Traders continued to monitor planting and weather reports from Australia and Argentina.

 

They also noted Brazilian business daily Valor Economica reported Wednesday that Brazil's government would likely remove a 10% import tax on wheat in August in response to concerns that the country's No. 1 supplier, Argentina, will restrict wheat exports.

 

The U.S. Department of Agriculture is scheduled to release Thursday its weekly U.S. wheat export sales data. Analysts expected the USDA to report net weekly U.S. wheat export sales to range between 250,000 tonnes to 400,000 tonnes.

 

 

Kansas City Board of Trade

 

KCBT July wheat settled down 10 1/2 cents at US$4.61 after falling below its 50-day moving average of US$4.68 1/4 to a one-month low of US$4.57.

 

Harvest pressure continued to weigh on HRW wheat futures, with the Kansas Wheat Harvest Report on Wednesday noting rain delays this week in some locations and an advancing harvest in other areas.

 

Kansas, the top U.S. winter wheat producing state, is forecast to produce 291.4 million bushels of winter wheat this year, well below last year's tally of 380 million bushels.

 

 

Minneapolis Grain Exchange

 

MGE July wheat closed down 11 1/4 cents at US$4.33 3/4 after falling through its 50-day moving average of US$4.44 to a one-month low of US$4.32 per bushel.

 

Speculative fund sales and good U.S. spring wheat growing weather weighed on MGE wheat futures, brokers said.

 

Forecasts called for continued good growing weather across the U.S. Northern Plains, brokers said.

 

Scattered showers up to 1/2 inch, with possible heavier local rains, were forecast for Thursday. Dry conditions or just a few light showers were expected on Friday, and mostly dry conditions were expected on Saturday and Sunday, DTN Weather said.

 

Dry conditions or just a few light showers were seen for Monday and Tuesday, while temperatures were expected to be near to above-normal levels.

 

The six- to 10-day weather forecast for the U.S. spring wheat belt called for near to above-normal temperatures and near to below-normal rainfall.

 

Cash U.S. spring wheat basis bids were steady to 10 cents lower Wednesday, cash sources said. Wednesday's Minneapolis wheat receipts totaled 95 railcars versus last year's 172 railcars. There were 26 durum receipts versus last year's 32 cars.