November 23, 2005
US Wheat Review on Tuesday: Ends lower; funds sell minneapolis grain exchange spring wheat
U.S. wheat futures ended lower Tuesday, led by losses in Minneapolis Grain Exchange spring wheat on lingering fund liquidation, brokers said.
High-protein Kansas City Board of Trade hard red winter wheat futures fell to a two-month low on lingering fund sales before Thursday's Thanksgiving holiday; commodity funds have been paring their net long KCBT and MGE fund position while boosting their net short CBOT stance this week.
U.S. wheat futures markets close at noon CST on Wednesday and Friday amid the Thanksgiving holiday.
Tuesday was the last day to trade CBOT and MGE December wheat options, while Friday is the last day to trade KCBT December wheat options.
CBOT December wheat ended Tuesday down 1 1/2 cents at US$2.97, a six-month low close on daily continuous charts after setting a contract low of US$2.95 1/4. CBOT March settled down 1/2 cent at US$3.12 3/4 after posting a contract low of US$3.11.
The nine-day relative strength indexes for the two nearby CBOT wheat contracts, both at 18, were well below the benchmark oversold level of 30.
Commodity funds were net sellers of about 1,500 lots, led by sales of 500 December by UBS Warburg and Prudential Financial. Fimat spread about 800 December/March ahead of the Nov. 30 first notice day for deliveries against December wheat.
Cash spot U.S. SRW wheat basis bids were steady to weak; spot midday Gulf SRW wheat basis bids firmed 2 cents, grain merchandisers said.
Overnight U.S. wheat export business was quiet, while traders noted Argentine and Australian wheat harvests were picking up steam.
Kansas City Board of Trade
KCBT December ended Tuesday down 2 1/4 cents at US$3.51 1/2, and March closed down 2 cents at US$3.55 3/4.
Cargill Investor Services sold 100 March and bought 400 December, Fimat sold 350 March; Prudential Financial bought 300 March and sold 100 December and 100 May; and UBS Warburg sold 300 March and 100 December, brokers said.
FC Stonnee spread 500 December/March, Frontier Trading spread 600 March/December, Fimat spread 100 December/May, and Refco Inc. and ADM each spread 100 March/July, brokers said.
The key KCBT/CBOT March wheat spread ended at 43, premium KCBT, after ending Monday at 44 1/2 cents, premium KCBT. The spread hit a high Nov. 10 of 49 3/4 cents as global demand for higher-protein U.S. wheat continues to outpace that for U.S. SRW wheat.
Deferred KCBT contracts found some support from the U.S. Department of Agriculture's report Monday of a slight deterioration in Southern Plains wheat fields. The USDA said 55% of the winter wheat crop was in good-to-excellent shape, down 1 percentage point from the previous week.
Still, traders noted forecasts for possible precipitation in the eastern U.S. HRW belt early next week, a factor that could help alleviate some worries about overly dry soils.
Cash spot U.S. HRW cash basis bids were mostly steady Tuesday; spot midday U.S. Gulf HRW basis bids were also steady, cash sources said.
Minneapolis Grain Exchange
MGE December ended Tuesday down 4 3/4 cents at US$3.62 1/2, below its 100-day moving average; and MGE March closed down 4 1/4 cents at US$3.66 1/2 per bushel, below both its 100- and 200-day moving averages.
Country Hedging was an early seller of March.
"We had some fund selling today in the March that pressured us early on," one MGE wheat broker said. "We also saw some commercial bearspreading the Dec/March."
There 155 railcars of wheat received Tuesday in Minneapolis, above last year's 148 cars; the larger shipments followed Monday's deliveries of 315 cars, nearly six-fold last year's receipts.
"Even last week, we saw some pretty good movement out of the western growing areas," the MGE broker said. "You normally see a bit of a run before Thanksgiving and then they quiet down into the first of the year."
