November 22, 2005

 

US Wheat Review on Monday: Ends lower on Specs; CBOT Dec below USUS$3/bu

 

 

U.S. wheat futures ended lower Monday, with Chicago Board of Trade December settling below key psychological support at USUS$3.00 per bushel on speculative sales despite a record net speculative short position, brokers said.

 

"Fundamentally, there is really nothing going on in this market," said Shawn McCambridge, a grain analyst at Prudential Financial.

 

"The funds are accumulating their record short position in Chicago and liquidating some of their positions in the other exchanges, and until we start to indicate that the lower prices are generating more demand, I think this market will remain heavy," he added.

 

A statement from India suggesting little need to import wheat this year was also noted. Traders had hoped India would resume imports after six years of exports.

 

"If you wanted to try to put a fundamental reason behind today's weakness, yes, you could probably say something like that," McCambridge said. "But I don't think it was too unexpected that they weren't going to jump into the market any time soon."

 

Meanwhile, weekly U.S. wheat export inspections, at 16.076 million bushels, lagged traders' estimates and also prolonged concerns about U.S. SRW wheat competitiveness amid ample global supplies and building Australian and Argentine wheat harvests.

 

CBOT December wheat ended down 3 1/2 cents at USUS$2.98 1/2, a 6-month low close on continuous charts after setting a contract low of USUS$2.98. CBOT March ended down 4 1/2 cents at USUS$3.13 1/4 after posting a contract low of USUS$3.13.

 

The nine-day relative strength indices for the two nearby CBOT wheat contracts, both at 19, were well below the benchmark oversold level of 30.

 

Commodity funds sold about 2,000 CBOT wheat futures during Monday's open outcry session, bring the net fund short position up to about 56,000 CBOT wheat futures, brokers said.

 

Cash spot U.S. SRW wheat basis bids were mixed Monday, with a 5-cent gain in Chicago and a 2-cent loss in Memphis, Tenn. Spot midday Gulf SRW wheat basis bids were steady, grain merchandisers said.

 

Traders expected the U.S. Department of Agriculture to report late Monday that the U.S. winter wheat crop condition was similar with last week's rating of 56% in good-to- excellent condition.

 

However, they noted lingering concerns about the Texas and Oklahoma crops.

 

 

Kansas City Board of Trade

 

KCBT December ended Monday down 4 1/2 cents at USUS$3.53 3/4, and March closed down 4 1/4 cents at USUS$3.57 3/4.

 

ADM Investor Services sold 500 March; Fimat sold 650 March and bought 500 December; Man Financial sold 600 December and 800 March; and UBS sold 150 December, brokers said.

 

In spread trade ahead of the Nov. 30 first notice day for deliveries against nearby December, ADM Investor Services spread 500 December/March; Man Financial spread 400 March/December; and UBS spread 500 March/December and 300 March/July, brokers said.

 

The key KCBT/CBOT March wheat spread ended at 44 1/2, premium KCBT, after ending Friday at 44 1/4 cents, premium KCBT. The spread hit a high Nov. 10 of 49 3/4 cents as global demand for higher-protein U.S. wheat outpaces that for U.S. SRW wheat.

 

Cash spot U.S. HRW cash basis bids were steady to firm Monday, with a 7-cent gains in Manhattan, Kan., and Enid, Okla. Spot midday U.S. Gulf HRW basis bids firmed 8 cents per bushel, cash sources said.

 

Forecasts for mostly dry weather through Friday, with near- to above-normal temperatures during the latter part of the week were seen increasing stress on the dry fields.

 

 

Minneapolis Grain Exchange

 

MGE December ended Monday down 2 1/2 cents at USUS$3.67 1/4, and MGE March closed down 2 3/4 cents at USUS$3.70 3/4 per bushel.

 

Cash spot U.S. spring wheat basis bids were steady to weak, with a 15-cent loss in the Minneapolis rail bid, with the spot Minneapolis rail bid up 15 cents, cash sources said.

 

Traders noted some support from ideas that springtime U.S. HRS plantings might be reduced following last year's good soybean yields across the U.S. northern Plains and increased vomitoxin levels in spring wheat.

 

Higher U.S. production input costs, particularly for fertilizer costs, would also weigh in favor of increased soybean plantings, they noted.