August 4, 2006

 

US Wheat Review on Thursday: Mixed; chicago sells off late

 

 

U.S. wheat futures closed mixed Thursday, as a sell-off in Chicago pressured that market after a large fund turned seller ahead of the closing bell, sources said. Kansas City finished steady to lower in sympathy with Chicago but Minneapolis prices remained firm.

 

Chicago Board of Trade September fell 6 1/4 cents to US$3.95 1/4 and December closed 7 cents lower at US$4.14 1/2 a bushel.

 

Specs and funds had been decent buyers in wheat for much of the day, particularly in Chicago, but that turned around when Fimat sold in late dealings. "That pushed the market down into commission house sell stops as we made new lows for the day, and that was it, down we went," said Vic Lespinasse, floor broker and analyst at A.G. Edwards.

 

For much of the day, however, the market was supported by good weekly export sales that topped expectations, coming in at a net 583,400 metric tonnes and a new high for the marketing year. Sales were 26% above the previous week and 80% higher than the previous four-week average, the U.S. Department of Agriculture said.

 

Ongoing talk of wheat export business to China, Iraq and India supported the market, Lespinasse said.

 

In addition, traders viewed agricultural attache reports citing lower production in Australia and Canada as supportive.

 

The USDA attache in Australia estimated the country's 2006-07 wheat crop at 20.9 million tonnes, down from a previous forecast of 24 million tonnes, because of late planting rains and historically cold weather. Dry weather across much of the continent during the critical planting period, however, was the main reason for the reduction.

 

Canada's wheat production for 2006-07 is estimated down slightly at 26.3 million tonnes, despite increased acreage, as yields are expected to return to trend levels, the attache there said.

 

The Canadian Wheat Board on Thursday, however, estimated the all-wheat crop at a more bullish 22.7 million tonnes, versus 23.6 million tonnes in June.

 

Canada is poised to offer additional wheat to Egypt following confirmation of a recent sale of soft wheat, an official with the Ontario Wheat Board said Thursday. Egypt's General Authority for Supply Commodities confirmed on July 27 it purchased 60,000 tonnes of soft Canadian wheat from Bunge Canada and two cargoes of 55,000 tonnes each from Louis Dreyfus, all at US$139/tonne.

 

At the CBOT, Calyon Financial bought 1,000 September, Fimat bought 600 September and 600 July, Man Financial bought 400 December, Shatkin Arbor bought 400 December, Deutsche Bank bought 500 December and Rand Financial bought a net 200 September.

 

ABN Amro sold 500 September, R.J. O'Brien bought 300 September and Tenco bought 200 September.

 

Funds were net buyers of 3,000 contracts as of 1:30 p.m. EDT, but that was before the late sell-off.

 

 

KANSAS CITY BOARD OF TRADE

 

KCBT wheat futures also found early support from the export sales data, but eventually succumbed to the late selling at the CBOT.

 

Traders continued to liquidate September positions as they wait for news on any tenders from Iraq or India, an analyst said.

 

ADM and Fimat were each early buyers of a net 100 December, while FCStonnee sold 100 December.

 

KCBT September settled 1/4 cent lower at US$4.85 and December eased 3/4 cent to US$5.01 a bushel.

 

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE wheat closed higher and was the only market to hold onto gains amid the late selling.

 

The decline this week to over one-month lows and a short spring wheat crop are preventing traders from taking the market too much lower, a broker said.

 

The spring wheat harvest is advancing rapidly and traders expect 30%-40% of the crop to be cut by Sunday, compared to 22% last week.

 

MGE September rose 3 cents to US$4.76 and December gained 2 1/4 cents to US$4.87 3/4.