October 22, 2005

 

US Wheat Review on Friday: Lower on fund sales, soy losses

 

 

U.S. wheat futures settled lower Friday following double-digit losses in Chicago Board of Trade soybean futures on worries about deadly avian influenza and forecasts for rains in northern Brazil, brokers said.

 

Concerns are that global soybean and soymeal demand could falter if the spread of this killer strain is not slowed soon, they noted.

 

CBOT December soft red winter wheat closed down 2 1/4 cents at US$3.30 after setting a three-week low this week of US$3.26. CBOT March wheat ended down 1 3/4 cents at US$3.45.

 

U.S. wheat futures tend to falter at this time of year amid ideas of upcoming aggressive marketing of the Southern Hemisphere wheat crops, analysts noted. Argentine and Australian farmers have just started to harvest their wheat crops.

 

Commodity funds sold at least 1,500 CBOT wheat contracts, brokers said. Rand Financial sold 500 December, Prudential Financial and DT Trading each sold 300 December, and UBS bought 1,700 December, they noted.

 

In options trade, Prudential Financial sold 700 December US$3.00 put options.

 

Talk that U.S. farmers are increasing winter wheat plantings this autumn, particularly soft red winter wheat seedings, and good rains this week also weighed on deferred U.S. wheat futures, brokers said.

 

"Soft red (winter wheat) acreage in the eastern Midwest is expected to increase nearly everywhere, with Indiana up 15%, Ohio up 7-8%, and Arkansas alone up 400,000 acres," said Refco Inc. analysts this week in the Refco Global Research's Monthly Crop Roundup.

 

"Most reporters indicate good emergence on the 2006 winter wheat crop which should increase winter hardiness," they added.

 

Ohio State University agronomist Pierce Paul said the 20% of the state's crop still left to plant, mostly in the western and northwestern part of Ohio, could face increased risk of winter kill, poor stand quality and minimal tiller development.

 

"We like to see no-till wheat planted within the first 10 days after the Hessian fly-safe date," he said. "For northern Ohio that date is around September 24."

 

Still, Paul told Dow Jones "speculation" was that Ohio SRW wheat acreage was climbing amid favorable wheat farming economics compared to corn. High natural gas prices have boosted nitrogen fertilizer costs, thereby boosting corn input costs, he added.

 

Cash U.S. soft red winter wheat basis bids were mixed Friday, with 4-cent losses in St. Louis and Memphis bids, cash sources said. Midday spot CIF SRW bids were steady while bids for November fell 1 cent, they noted.

 

The USDA noted Friday that total 2005-crop wheat entries into the government's 9-month price support loan program are 105.500 million bushels, up 0.727 million bushels during the week ended Oct 18.

 

 

Kansas City Board of Trade

 

KCBT December wheat ended down 3 cents at US$3.70 after setting Wednesday a three-week low of US$3.66 1/2, and March closed down 3 1/2 cents at US$3.75 1/2.

 

Benson Quinn sold 1,100 Dec and bought 100 March and 100 July; Man Financial sold a net 700 Dec and 100 March; Refco Inc. sold a net 650 December and bought 100 July; and UBS bought a net 1,200 December and 300 March, brokers said.

 

In spread trade, UBS spread 400 December/March; Cargill Inc. spread 250 December/March and 100 December/July; and Prudential Financial spread 100 March/December, they noted.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Friday, cash sources said. Midday spot CIF bids were unchanged, they noted.

 

Improved U.S. hard red winter wheat growing weather and talk of increased HRW plantings also continued to weigh on deferred contracts, brokers said.

 

"Kansas hard red winter wheat acreage is expected to be near unchanged, while Nebraska wheat acreage is expected to increase 3%-5%," the Refco Inc. analysts said this week in their Global Monthly Crop Roundup.

 

Kansas was the top U.S. wheat producing state last year, while Nebraska is the 10th-largest wheat producer.

 

 

Minneapolis Grain Exchange

 

MGE December wheat settled Friday down 2 1/2 cents at US$3.71 1/2 after setting Wednesday a one-month low of US$3.65 1/2, and March closed down 2 1/2 cents at US$3.78 1/4.

 

ADM Investor Services was a noted seller early of December, brokers said.

 

Cash spring wheat basis bids were mixed Friday, with a 5-cent gain in Minneapolis rail bids, grain sources said.