August 31, 2007

 

CBOT September wheat deliveries at 500 to 1,000 lots

 

 

Deliveries against the Chicago Board of Trade (CBOT) September wheat contract are generally expected to be 500 to 1,500 contracts, with owners reluctant to give up too much physical supply, floor traders and analysts said Thursday (August 30).

 

First notice day for the contract is Friday (August 31), which means it is the first day on which notices of intention to deliver actual commodities against futures market positions can be received.

 

As of Wednesday, 4,148 CBOT wheat contracts were registered for delivery, according to the CBOT Registrar's Office. Registration doesn't guarantee delivery, but wheat contracts must be registered with the exchange in order to be delivered.

 

Deliverable stocks in CBOT-approved warehouses in Chicago, Toledo and St. Louis totalled 38.354 million bushels as of Aug. 24, the exchange said. Open interest in CBOT September wheat was 12,477 contracts as of the close of business Wednesday.

 

Deliveries should be within 800 to 1,500 contracts because there is too much uncertainty regarding global production for commercials to deliver, a cash-connected CBOT floor trader said. Also, strong gains in the market Thursday make the commercials wonder whether concerns about tight supplies or production are expanding.

 

The trade is keeping its eye on conditions in Australia and Argentina, where dryness has impacted some wheat-growing areas. Fears about dwindling global stocks and strong demand have pushed US wheat sharply higher in recent weeks.

 

CBOT Sep wheat was up 29 cents at US$7.71 per bushel at 13:20 p.m. EST. A year ago, the contract traded at US$4.04.

 

The September/December wheat spread is trading at about 14 cents. Carry - or the cost of taking delivery of the grain, including storage, insurance and interest - is about 24 cents, the cash-connected CBOT floor trader said.

 

Joe Victor, vice president of marketing at Allendale, pegged deliveries at about 300-500 contracts. The US Department of Agriculture has forecast world wheat ending stocks at the lowest level since 1980-81, he noted.

 

"Any owner that has that warehouse receipt in his hand, by risk of putting that out on the market loses that physical supply," Victor said.

 

At the Kansas City Board of Trade, deliveries are expected to be about 200 to 400 contracts, a floor trader said.

 

Deliverable stocks in KCBT-approved warehouses totalled 24.28 million bushels as of Aug. 24, according to the exchange. Open interest in KCBT July wheat was 9,458 contracts as of the close of business Wednesday, the exchange said.

 

At the Minneapolis Grain Exchange, traders said they expected deliveries of 300 to 700 contracts.

 

MGE Sep wheat open interest at the end of the day Wednesday was 2,124 contracts, according to the exchange. There was a total of 22.43 million bushels of deliverable stocks in MGE-approved warehouses as of Aug. 24, the exchange said.