November 16, 2005

 

US Wheat Review on Tuesday: Ends lower; CBOT sets new lows on funds

 

 

U.S. wheat futures settled lower Tuesday after aggressive last-minute fund selling in nearby Chicago Board of Trade wheat futures pressured those contracts to new lifetime lows, brokers said.

 

Quiet U.S. wheat export sales amid a two-year high in the U.S. dollar, strong global wheat export competition and the advancing Southern Hemisphere harvest also weighed on CBOT wheat after early short-covering gains, they noted.

 

Chicago Board of Trade December wheat ended down 4 3/4 cents at US$3.07 per bushel, after setting a new contract low of US$3.06; CBOT March wheat closed down 4 3/4 cents at US$3.23 1/4, above its new low of US$3.23.

 

Funds sold about 2,000 CBOT wheat late, bringing the day's fund sales to about 4,000 lots. Citigroup sold 800 December late, Fimat sold 500 December and JP Morgan sold 300 December, brokers said. Earlier, Fimat sold 1,000 December and bought 400 March.

 

Spread trade was active throughout the session ahead of first notice day for deliveries against December contracts (Nov. 30): O'Connor spread 2,500 December/March early; Iowa Grain spread 3,000 July/December and later spread 1,500 March/December; Fimat spread 3,000 December/March; and R.J. O'Brien spread 1,000 December/March.

 

Cash spot U.S. SRW wheat basis bids were steady to firm, while spot midday Gulf SRW wheat basis bids were steady, grain merchandisers said.

 

U.S. wheat export sales were quiet, while Japan said it would tender for 60,000 tonnes of U.S. wheat Wednesday in an overall tender for 100,000 tonnes.

 

After the U.S. wheat futures markets closed, traders said Egypt tendered for 50,000-60,000 tonnes of optional-origin wheat and 25,000 to 60,000 tonnes of Russian wheat.

 

In global wheat news, Syria sold 50,000 tonnes of wheat, while the U.S. Department of Agriculture suspended Australia's wheat exporter AWB's access to a U.S. credit export program - a move AWB and U.S. wheat analysts said would have little practical effect on global trade or prices.

 

The suspension followed a United Nations report released in late October alleging AWB paid kickbacks totaling USUS$221.7 million under a U.N. oil-for-food program to a Jordanian trucking company that were channeled to the Saddam regime.

 

Meanwhile, Standard & Poor's Inc. lowered its ratings for the Canadian Wheat Board (CWH.YY) to negative from stable because of "the rising probability that the CWB's institutional arrangements with the Canadian government will materially change," according to an S&P press release.

 

 

Kansas City Board of Trade

 

KCBT December ended down 3 3/4 cents at US$3.60 3/4 and KCBT March closed down 3 cents at US$3.65 3/4.

 

ADM Investor Services sold 200 March, Frontier sold 300 March, Cargill Investor Services bought 250 December, Fimat and Goldenberg Hehmeyer each bought 200 December, Refco Inc. bought 600 July and sold 200 December and 400 March, Shay Trading sold 150 December and 200 March, Term Commodities bought 420 March and sold 420 July and UBS sold 200 March, brokers said.

 

In spread trade, Fimat spread 400 December/July, ADM Investor Services sold 350 December/March and Shay Trading sold 350 December/March, they noted.

 

Cash spot U.S. HRW cash basis bids were steady, while spot midday U.S. Gulf HRW basis bids were also unchanged, cash sources said.

 

Deferred contracts found early support from a 1-percentage-point decline in the U.S. winter wheat good-to-excellent condition rating.

 

The USDA reported late Monday that 56% of the U.S. winter wheat crop was in good-to-excellent condition.

 

The crop in Kansas, the top U.S. winter wheat-growing state, was rated 68% in good-to-excellent shape as of Sunday, an improvement after recent rains.

 

Winter wheat conditions in Oklahoma and Texas, also key growing states, declined due to lingering hot, dry conditions. The good-to-excellent rating in Oklahoma fell 6 percentage points to 50%, while Texas' good-to-excellent crop rating fell 6 percentage points to 28% from 34% last week.

 

 

Minneapolis Grain Exchange

 

MGE December ended down 1/2 cent at US$3.74 1/2 and March closed down 1 cent at US$3.78 1/2 per bushel.

 

"We seem to be in a vacuum at the moment, and are following losses in KCBT wheat," one broker said.

 

Cash spot U.S. spring wheat basis bids were steady to weak, cash sources said.