June 29, 2006

 

US Wheat Review on Wednesday: Mostly weak on technical, speculative sales

 

 

U.S. wheat futures ended mostly weak Wednesday, but above the session's lows, on speculative and technical selling after recent gains based on deteriorating U.S. spring wheat crop conditions, brokers said.

 

Weak precious metals futures prices, a boost in the U.S. dollar index versus the euro, and speculation that U.S. wheat suppliers were not awarded sales in India's 2.2 million buy tender were also bearish for U.S. wheat futures, they added.

 

Consolidation was noted ahead of Friday's first notice day for deliveries against the three U.S. July wheat futures contracts and the USDA's 2006 U.S. June 1 wheat stocks and 2006 U.S. wheat acreage estimates.

 

Analysts surveyed by Dow Jones Newswires on average forecast the USDA would report U.S. wheat supplies as of June 1, or 2005-06 U.S. wheat ending stocks, at 548 million bushels. That number would just slightly top the June 9 USDA 2005-06 U.S. wheat ending stocks estimate of 547 million bushels and the 2005-06 June 1 U.S. wheat stocks tally of 540 million bushels.

 

The average analyst estimate for 2006 U.S. all-wheat plantings was 57.756 million acres, above the USDA's March estimate of 57.128 million acres and above the 2005 all-wheat plantings tally of 57.229 million acres.

 

U.S. 2006 spring wheat plantings were seen at 14.563 million acres, above the USDA's March 2006 spring wheat planting intentions estimate of 13.899 million and above last year's 14.036 million acres.

 

"If we don't see at least a million increase in spring wheat acres, the second phase of the rally will commence," a Kansas City Board of Trade wheat source said, noting concerns about deteriorating U.S. spring wheat conditions had prompted the recent rally in the three U.S. wheat futures markets.

 

CBOT September wheat ended Wednesday down 6 1/2 cents at US$3.88 a bushel after falling through its 100-day moving average of US$3.90 3/4.

 

Speculative funds sold about 500 CBOT wheat futures contracts by 1:30 p.m. EDT Wednesday, brokers said. Fimat Futures sold a net 300 September by 1:30 p.m. EDT, ABN Amro bought 500 September, JP Morgan bought 200 September and Tenco Inc. bought 200 December, they said.

 

In CBOT wheat spread trade, Prudential spread 800 July/September, they added.

 

Midday spot U.S. HRW Gulf barge bids were unchanged Wednesday while spot SRW CIF bids fell 4 cents, cash sources said.

 

In global wheat news, India said that most of the 2.2. million tonnes of wheat it had imported were from Europe, Canada and Argentina.

 

India on Wednesday cut the import duty for wheat to 5% from 50% to curb the local prices of the commodity. The new wheat import duty is applicable with immediate effect and will be valid until Dec. 31, an official statement said.

 

And recent rains across large areas of the parched Western Australian wheat belt will help what now appears likely to be a relatively small winter wheat crop, the president of lobby/services concern the Western Australian Farmers' Federation said Wednesday.

 

 

Kansas City Board of Trade

 

KCBT September ended Wednesday down 3 3/4 cents at US$4.99 3/4.

 

Spot cash 11% through 14% U.S. hard red wheat basis bids fell 5 cents Wednesday, according to the KCBT.

 

 

Minneapolis Grain Exchange

 

MGE September closed down 2 1/2 cents at US$4.82.

 

Cash spring wheat basis bids were steady to 30 cents lower Wednesday, cash sources said.

 

Minneapolis wheat receipts Wednesday totaled 193 railcars versus last year's 264 railcars. There were 36 durum receipts versus last year's zero cars.