November 9, 2005

 

US Wheat Review on Thursday: Ends higher on technicals, crop condition

 

 

U.S. wheat futures settled higher Tuesday on a technical recovery from recent speculative-led losses, including Monday's contract low in Chicago Board of Trade December wheat, and on forecasts for more hot, dry U.S. Southern Plains wheat-growing weather, brokers said.

 

Rolling of positions by reportedly long-only index funds, from nearby December to March 2006, July 2006 and far deferred December 2006 contracts, was again noted in CBOT and Kansas City Board of Trade wheat futures ahead of the Nov. 30 first notice day for deliveries against front-month December, brokers said.

 

CBOT December wheat futures settled Tuesday up 3 cents at US$3.13, while CBOT March wheat ended up 3 1/2 cents at US$3.29 1/4.

 

Commodity funds bought about 1,600 CBOT wheat futures, with late selling of 1,000 December by Iowa Grain, late buying of 500 March by Fimat and late buying of 200 March by both Merrill Lynch and Calyon Financial.

 

In spread trade, Rand Financial spread 1,500 March/December and 400 December/July; Fimat USA spread 500 December/July; FC Stone spread 500 March/December 2006; and Calyon Financial spread 500 December 2005/December 2006 late, brokers said.

 

Cash spot U.S. SRW wheat basis bids were narrowly mixed Tuesday, cash brokers said. Spot midday CIF SRW wheat basis bids were steady, they noted.

 

Overnight U.S. wheat export sales were quiet, while Japan said it would tender Thursday for 142,000 metric tonnes of wheat, including 86,000 tonnes of U.S. wheat.

 

Still, global wheat export competition remained stiff.

 

Russia's wheat exports to Egypt in the 2005-2006 marketing season are likely to increase to 3 million metric tonnes from 2 million in 2004-2005, market analyst APK-Inform said in a report Tuesday. Egypt is a top U.S. wheat customer.

 

Syria also said Tuesday that it was tendering to sell 50,000 metric tonnes of wheat for Nov. 15 to Dec. 30 delivery.

 

U.S. wheat traders kept an eye on lingering rains in key exporter Australia's southern two-thirds of New South Wales state.

 

They also noted the Canadian Wheat Board was offering a Guaranteed Delivery Contract for feed wheat for the first time. The contracts guarantee producers delivery by a specific date and allow the CWB to more effectively market feed wheat by ensuring supply to customers, the CWB said.

 

There was very light trading interest pertaining to Thursday's scheduled U.S. Department of Agriculture crop supply/demand report.

 

Old-crop U.S. wheat prices are more dependent on demand issues and new-crop prices should follow wheat condition ratings more closely as the season progressed, traders said.

 

Analysts surveyed by Dow Jones forecast on average said that the government would report Thursday 2005-06 U.S. wheat ending stocks at 533 million bushels, up slightly from last month's 530 million bushels.

 

 

Kansas City Board of Trade

 

KCBT December wheat ended Tuesday up 5 cents at US$3.64 3/4, and March closed up 3 3/4 cents at US$3.70 3/4.

 

Cargill Investor Services sold 250 December, 200 March and bought 200 July; Man Financial sold 100 December and bought 300 March; ADM Investor Services sold 300 March and bought 200 December; and Shay Trading bought 300 March and sold 200 December, brokers said.

 

"The decline in the crop conditions report was the spark that ignited the rally," one KCBT broker said. "However, it was commercial rolls that forced the issue for Dec."

 

Fimat USA sold 5,000 KCBT December/March; Shay Trading sold 700 Dec/March; UBS sold 600 Dec/March; Man Financial bought 500 December/March; and UBS bought 800 December/March, brokers said.

 

The USDA said Monday the U.S. winter wheat crop was only 57% in good to excellent condition as of Sunday, a drop from 61% in that shape last week following dry weather in the key U.S. Southern Plains hard red winter wheat area.

 

Ninety-five percent of the U.S. winter wheat crop had been planted by Sunday, ahead of the long-term average of 92%, while 84% of the crop had emerged, up from the long-term average of 80%, the USDA said.

 

And dry conditions were expected to persist across the Southern Plains hard red winter wheat belt through Saturday; temperatures were expected to top normal readings from Thursday into the weekend, Meteorlogix said Tuesday.

 

Cash spot U.S. HRW wheat basis bids were mixed Tuesday, with an 8-cent gain in Lincoln, Neb., while spot midday Gulf HRW basis bids were unchanged, cash sources said.

 

 

Minneapolis Grain Exchange

 

MGE December wheat settled Tuesday up 3 1/2 cents at US$3.72, and March closed up 4 cents at US$3.78 per bushel, brokers said.

 

Support stemmed from gains in KCBT wheat, brokers said.

 

Cash spot U.S. spring wheat basis bids were mixed Tuesday, with a 20-cent loss in the Minneapolis rail bids and a 6-cent gain in the Billings, Mont., bid, grain merchandisers said.