June 22, 2006

 

US Wheat Review on Wednesday: Higher; human rights watch, spring wheat cash basis up

 

 

U.S. wheat futures ended higher Wednesday, boosted by gains in Kansas City Board of Trade and Minneapolis Grain Exchange wheat futures on concerns about U.S. higher-protein wheat supplies, brokers said.

 

The recent deterioration in the U.S. spring wheat crop's condition, forecasts for near-term dry weather in the Northern Plains spring wheat belt, signs that the U.S. HRW wheat harvest is beginning to wind down, and lingering rain delays in Kansas spurred the buying, brokers said.

 

Commercial buying continued in KCBT wheat futures, while spot cash basis bids for 11% to 14% U.S. hard red wheat basis rose 5-10 cents, the KCBT said.

 

Farther north, cash U.S. spring wheat basis bids rose a stunning 20-30 cents Wednesday in Minneapolis on good mill demand, according to the U.S. Department of Agriculture.

 

Spreading was again seen in the wheat futures markets before the June 30 first notice day for deliveries against the three U.S. July contracts, U.S. wheat futures brokers said.

 

Meanwhile, they awaited Thursday's estimate of Canadian wheat plantings from Statistics Canada, with analysts forecasting an estimate of 26 million to 26.7 million acres, up from the April StatsCan estimate of 25.620 million acres.

 

Chicago Board of Trade September wheat settled Wednesday up 4 1/2 cents at US$3.89 1/4 a bushel.

 

Funds bought at least 3,500 CBOT wheat futures by 1330 EDT, brokers said.

 

O'Connor and Co. bought 2,000 December and 600 July, Prudential bought 1,000 September, Man Financial bought 700 September, ABN Amro sold 1,200 September and Fimat sold 800 September and 200 July while buying 1,000 CBOT September corn.

 

Midday spot U.S. HRW Gulf barge bids were unchanged Wednesday while the spot SRW bid rose 1 cent, cash sources said.

 

The Korea Flour Milling Co. Ltd. bought 17,500 metric tonnes of U.S. No. 1 wheat, including 7,000 tonnes of western white, 6,000 tonnes of hard red winter and 4,500 tonnes of dark northern spring; and two South Korean flour mills - Daehan and Daesun - bought 9,500 metric tonnes of U.S. No. 1 wheat, including 3,000 tonnes of soft white, 1,500 tonnes of hard red winter and 5,000 tonnes of dark northern spring.

 

In global wheat export news, Jordan canceled a tender to buy 50,000 tonnes of wheat.

 

In other wheat news, Argentina's Agriculture Secretariat forecast Argentina farmers would plant 5.6 million hectares of wheat in 2006-07, down from last year's 5.16 million hectares.

 

Farmers produced 12.5 million metric tonnes of wheat in 2005-06, well below the previous year's 16 million tonnes.

 

Argentine wheat is planted May through September and collected October through January.

 

The European cash wheat market firmed Wednesday on speculation that European wheat might be competitive for India's 2.2 million metric tonne import tender, traders said.

 

The French state grains board National Service Interprofessional des Grandes Culture, or ONIGC, forecast Wednesday 2006-07 soft wheat production of 36.9 million metric tonnes, up 6% from the previous year.

 

It also increased its 2006-07 forecast for hard wheat production by 10% to 2.2 million tonnes. ONIGC also on Wednesday increased its forecast for 2006-07 soft wheat ending stocks to 3.82 million metric tonnes, from 3.758 tonnes estimated in May; and boosted its forecast for 2006-07 hard wheat ending stocks to 0.158 million tonnes from 0.147 million tonnes in May.

 

And Ukraine's leading agricultural market analyst APK-Inform boosted its forecast for Ukraine's wheat harvest this year by 500,000 tonnes to 12.5 million metric tonnes. It also boosted its forecast for Ukraine's wheat exports in the 2006-2007 marketing year to 2.2 million tonnes, from 2 million tonnes previously.

 

 

Kansas City Board of Trade

 

KCBT September closed up 9 cents at US$4.91 1/2 per bushel.

 

Spot cash 11% U.S. hard red wheat basis bids rose 5 cents Wednesday, bids for 12% and 13% HRW rose 10 cents and bids for 14% HRW rose 8 cents, according to the KCBT.

 

Lingering rain-led harvest delays in Kansas, the top U.S. winter wheat producer, also underpinned KCBT wheat, broker said.

 

The U.S. winter wheat crop was 38% harvested as of Sunday, more than double last year's tally and 17 percentage points above the five-year average, the USDA said Monday.

 

 

Minneapolis Grain Exchange

 

MGE September ended up 10 3/4 cents at US$4.64 1/4 per bushel.

 

Wednesday's Minneapolis cash wheat receipts totaled 182 railcars versus last year's 225 railcars. There were 35 durum receipts versus last year's 70 cars.

 

The USDA reported Monday a 7 percentage point drop in the U.S. spring wheat crop's good-to-excellent condition rating to 60%.

 

Twenty-one percent of the U.S. spring wheat crop was headed, making the weeks a critical one for crop development.