November 19, 2005

 

US Wheat Review on Friday: Settles mixed; CBOT sets contract lows

 

 

U.S. wheat futures ended mixed Friday, with Chicago Board of Trade December soft red winter wheat setting a contract low late and nearby KCBT wheat up on abating fund long liquidation, brokers said.

 

U.S. wheat export news was quiet, while good U.S. SRW wheat crop conditions heading into winter contrasted with dry hard red winter wheat conditions in Texas and Oklahoma.

 

CBOT December wheat ended down 2 3/4 cents at US$3.02 after setting a contract low of US$3.01 1/4; and CBOT March ended down 3 1/4 cents at US$3.17 3/4 after posting a contract low of US$3.17 1/2.

 

The nine-day relative strength indices for the two near by CBOT wheat contracts, both at 23, were well below the benchmark oversold level of 30.

 

Commodity funds sold a net 1,000 to 2,000 CBOT wheat futures during Friday's open outcry session, brokers said. Fimat was a late seller of about 500 December while buying 500 March, they noted. Iowa Grain sold 500 December early.

 

In spread trade ahead of the Nov. 30 first notice day for deliveries against CBOT December, ADM Investor Services spread 700 December/July while R.J. O'Brien spread 700 December/March. Refco spread 400 December/March, they noted.

 

Cash spot U.S. SRW wheat basis bids were steady to firm Friday, with a 10-cent gain in Evansville, Ind., while spot midday Gulf SRW wheat basis bids were steady, grain merchandisers said.

 

Forecasts called for possible light flurries on Friday and Saturday across the U.S. Midwest soft red winter wheat belt, and mostly dry conditions Sunday through Tuesday. Near to above-normal temperatures were anticipated in the latter period.

 

The U.S. Department of Agriculture will update Monday afternoon its U.S. winter wheat crop condition data.

 

Last Monday, the USDA said 56% of the U.S. winter wheat crop was in good to excellent condition, down 1 percentage point from the previous week.

 

In global wheat news, Argentine farmers had harvested about 8.3% of their 2005-06 wheat crop as of Saturday, according to the Buenos Aires Exchange.

 

The USDA last forecast Argentina's 2005-06 wheat harvest at 12.1 million metric tonnes, compared with 16 million a year ago.

 

The Canadian Wheat Board forecast larger exports during 2005-06 (August/July) than the previous year but declined to give more specific details.

 

Moreover, the scheduled removal of U.S. tariffs on Canadian wheat in March 2006 could lead to more Canadian wheat headed to the U.S., a CWB official said.

 

In 2004-05, Canada exported 10.8 million metric tonnes of wheat and 3.2 million tonnes of durum.

 

Ukraine's State Reserve said it was unable to meet its obligation to export 280,000 metric tonnes of milling wheat as the government has blocked its accounts due to a shortage of milling wheat for the domestic milling industry.

 

Finally, India said it had begun trading wheat futures at the CBOT although it still didn't believe wheat imports were necessary near-term.

 

There has been speculation in the market that India may buy wheat, possibly from Australia or the U.S.

 

 

Kansas City Board of Trade

 

KCBT December ended Friday up 4 cents at US$3.58 1/4 and March closed up 1 1/4 cents at US$3.62.

 

Cargill Investor Services sold a net 200 March and bought 200 December; Prudential Financial sold a net 100 December, 100 March and 100 July; UBS sold 450 December and 50 March; and ADM Investor Services bought 300 December and sold 200 March, brokers said.

 

In spread trade, Man Financial and Refco Inc. each spread 200 December/March while UBS spread 250 March/December and FC Stonnee spread 150 March/July.

 

The key KCBT/CBOT March wheat spread ended at 44 1/4, premium KCBT, after ending Thursday at 39 3/4 cents, premium KCBT. The spread hit a high on Nov. 10 of 49 3/4 cents as global demand for higher-protein U.S. wheat outpaces that for amply supplied U.S. SRW wheat.

 

Cash spot U.S. HRW cash basis bids were steady to firm Friday, while spot midday U.S. Gulf HRW basis bids were steady, cash sources said.

 

Forecasts called for lingering dry weather across the U.S. Southern Plains hard red winter wheat belt through Tuesday and above-normal temperatures from Sunday through Tuesday.

 

 

Minneapolis Grain Exchange

 

MGE December ended Friday down 1/4 cent at US$3.69 3/4; and March closed down 1/4 cent at US$3.73 1/2 per bushel.

 

Cash spot U.S. spring wheat basis bids were steady to firm Friday, with the spot Minneapolis rail bid up 15 cents, cash sources said.