October 25, 2005

 

US Wheat Review on Monday: Ends weak on Specs, slow exports, weather

 

 

U.S. wheat futures settled lower Monday on technical sales amid a seasonal price decline and a lack of fresh U.S. wheat export news, while improved U.S. winter wheat growing weather pressured deferred CBOT and KCBT wheat futures, brokers said.

 

"It really depends on whether the funds want to press the market at the current level," said Shawn McCambridge, a grain analyst.

 

"From a fundamental point of view, I think the market will find support down at these levels and start to consolidate," he said. "But it still depends on demand, and finding more demand for the U.S. products."

 

CBOT December soft red winter wheat closed down 6 3/4 cents at US$3.23 1/4 after setting a one-month low of US$3.22 1/2. CBOT March wheat ended down 6 1/2 cents at US$3.38 1/2.

 

Commodity funds sold at least 3,500 lots led by Refco Inc.'s sale of 2,000 December, brokers said. Iowa Grain sold 700 December, while UBS bought 1,000 December and Man Financial bought 1,100 July and sold 200 December, they said.

 

Fimat spread 500 March/December while Man Financial spread 1,100 CBOT July wheat/July corn, they noted.

 

U.S. wheat prices generally decline in late October as early harvest of the Southern Hemisphere wheat crops signal upcoming global export competition, analysts noted.

 

National Australia Bank Ltd. (NAB.AU) forecast Monday an Australian wheat crop of 22.6 million metric tonnes, up 11% from last year. The USDA in early October lifted its new crop estimate to 22.0 million tonnes from 21.5 million.

 

Overnight U.S. wheat export business was slow, while the U.S. Department of Agriculture reported weekly U.S. wheat export inspections totaled 20.928 million bushels, matching traders' estimates. Hard and white wheat were again the leading classes.

 

Traders also noted unsubstantiated rumors of a U.S. HRW wheat sale to Iraq circulated the KCBT trading floor, while the head of the Iraqi Grain Board told Dow Jones Newswires that Iraq had rejected Australian offers and would soon finalize the purchase of 1 million metric tonnes of U.S. wheat.

 

Spot U.S. soft red winter wheat basis bids were mixed Monday while midday CIF bids were unchanged, cash sources said.

 

In global wheat news, Morocco said Saturday it bought 420,000 metric tonnes of EU soft wheat.

 

Turkey said it sold 25,000 metric tonnes of red milling wheat in a tender that had originally been set to sell up to 175,000 metric tonnes of red milling wheat; and Egypt said Monday that it is tendering to buy 34,000 metric tonnes of Russian wheat on Oct. 26.

 

Russia market analyst SovEcon said in a report Monday that Russia had exported 3.7 million metric tonnes of wheat between July 1 and Sept. 30, up 1.1 million metric tonnes from the previous year.

 

However, Ukraine noted that winter crops had sprouted on only 43% of planted acreage due to dry conditions. The country's agriculture minister said Monday that the government would buy the necessary amount of spring wheat seeds to increase the spring wheat planted area to make up for the winter wheat losses.

 

 

Kansas City Board of Trade

 

KCBT December wheat ended down 4 3/4 cents at US$3.65 1/4, after setting a 3 1/2-week low of US$3.63 1/2, and March closed down 4 cents at US$3.71 1/2.

 

Man Financial sold a net 1,000 December, 50 March and bought 100 May and 100 July; Fimat USA bought a net 700 December and 350 March; Cargill Investor Services sold a net 700 December and 300 March; ADM Investor Services bought a net 100 December, 100 March and 100 July; and Frontier Trading sold a net 300 March and bought 100 December and 50 July;

 

Cash spot U.S. hard red winter wheat basis bids were steady to weak Monday, while spot CIF bids were unchanged, they noted.

 

Improved U.S. hard red winter wheat growing conditions, following good rains last week, also weighed on deferred KCBT wheat contracts, brokers said.

 

 

Minneapolis Grain Exchange

 

MGE December wheat settled Monday down 5 cents at US$3.66 1/2 after setting a one-month low of US$3.65, and March closed down 5 cents at US$3.73 1/4.

 

ADM Investor Services was an early seller of about 500 December, while UBS and Refco Inc. were light buyers of December, brokers said.

 

Cash spot spring wheat basis bids were narrowly mixed Monday, grain sources said.