November 1, 2005

 

US Wheat Review on Monday: Lower on fund liquidation in kansas city board of trade , minneapolis grain exchange

 

 

U.S. wheat futures settled lower Monday, led by month-end liquidation of a record fund net long stance in KCBT wheat and hefty MGE wheat fund net long position, brokers said.

 

Long KCBT and MGE/short CBOT December and March wheat spreads retreated slightly Monday, but traders said intermarket spreading was not featured during the session.

 

Still, the two higher-protein U.S. wheat markets were disproportionately pressured by weak U.S. HRW Gulf basis bids, the lack of confirmation of last week's rumored one-million-tonne U.S. wheat sale to Iraq, Egypt's weekend purchase of 60,000 tonnes of Australian wheat and the liquidation of a record fund long KCBT wheat stance.

 

"In our view, the highs (in KCBT/CBOT Dec wheat) we saw last week met the demands of the market and that unless we see new Iraqi or Nigeria demand stepping forward, it's kind of hard to get bullish on the spread relative to those two customers," said Dan Basse of Ag Resources in Chicago.

 

"I think that (the future direction of the KCBT/CBOT December wheat spread) depends on what follows," Basse said.

 

"We're told that the Australians and Canadians have programs in the works and are becoming more competitive," he said. "One has to wonder about the spreads going forward. We think it could maybe pull back to something like 35 or 40 cents."

 

CBOT December wheat futures settled Monday down 3/4 cent at US$3.17, just above last week's 8-1/2 month low of US$3.15 1/2. CBOT March wheat ended down 1/4 cent at US$3.32 3/4.

 

Commodity funds were light net buyers, with late trade on both sides by Fimat USA, which was a featured light seller of about 400 December on the day. ABN Amro spread 600 March/December.

 

Cash spot U.S. SRW wheat basis bids were mixed, with a 15-cent gain in Chicago and a 7-cent loss in Cincinnati; while spot midday CIF basis bids were steady, they noted.

 

U.S. weekly wheat export inspections, at 21.388 million bushel, met traders estimates.

 

Weekend news that Egypt bought 60,000 tonnes of U.S. soft white wheat from Louis Dreyfus at US$133.70 per tonne and 60,000 tonnes of Australian hard wheat at US$171.70/tonne was disappointing as it hinted at more aggressive near-term marketing from Australia, U.S. wheat traders said.

 

In other global wheat news, Japan said it would tender Wednesday for 100,000 metric tonnes of wheat, including 60,000 tonnes of U.S. wheat.

 

However, India said wheat imports were unlikely in the coming months while China's Zhengzhou Grains Wholesale Market said it would sell 447,000 metric tonnes of old wheat on Friday.

 

 

Kansas City Board of Trade

 

KCBT December wheat ended down 4 3/4 cents at US$3.71 1/4; and March closed down 3 3/4 cents at US$3.75.

 

Heavy early sales of about 500 December by Fimat USA pressured KCBT wheat; the FCM sold about 600 December during the session, along with buying 50 March, 50 May and 50 July, brokers said.

 

ADM Investor Services bought 300 December and sold 300 July; FC Stonnee bought 200 March and sold 50 December, General Mills sold 200 December, Goldenberg Hehmeyer sold 200 March, Man Financial sold 500 December and bought 200 July; Prudential Securities sold 300 March and 200 December while buying 150 July; Refco Inc. sold 100 December and bought 100 March and 200 July, Shay trading bough 250 December and UBS sold 350 May, brokers added.

 

In spread trade, ADM spread 300 December/March and 700 December/July; while Shay Trading spread 500 March/December, they added.

 

Cash spot U.S. HRW wheat basis bids were steady to firm Monday, with a 15-cent increase in Hutchinson, Kan., and a 10-cent gain in Portland, Ore.; while spot midday CIF basis bids were weak, they noted. The USDA will update late Monday its winter wheat crop progress report, but traders said the report still had little impact on wheat futures as the crop year was young.

 

Last Monday, the USDA said the U.S. winter wheat crop was 57% good to excellent compared with 76% last year.

 

 

Minneapolis Grain Exchange

 

MGE December wheat settled down 2 3/4 cents at US$3.72 1/2; and March closed down 3 cents at US$3.77 1/2.

 

Cash spot U.S. HRS wheat basis bids were steady to firm Monday, with a 10-cent gain in Duluth, Minn., grain merchandisers said.