November 29, 2005

 

US Wheat Review on Monday: Ends mixed amid oversold signs, soy gains

 

 

U.S. wheat futures closed mixed Monday on late technical buying amid oversold signals and on a late rally in Chicago Board of Trade soybean futures, brokers said.

 

The bounce followed speculative sales and rolling of December positions ahead of Wednesday's first notice day for deliveries against the three nearby U.S. wheat futures contracts, they added.

 

CBOT December wheat ended Monday up 1/2 cent at US$2.97 1/2 per bushel after setting a new contract low of US$2.95; while CBOT March settled up 1 cent at US$3.13 1/4 after posting a new contract low of US$3.10.

 

The 9-day relative strength indices for December and March ended Monday at 21 and 23, respectively. A level of 30 or below indicates oversold conditions.

 

Commodity funds were light net buyers after entering the open outcry session net short a near record amount of CBOT wheat futures.

 

Fimat was a late buyer of March wheat, Iowa was a late buyer of December and ADM Investor Services and Fimat each spread 2,000 December/March, brokers said.

 

CBOT traders late Monday expected between 2,000 to 4,000 delivery notices to be posted on Wednesday's first notice day against CBOT December wheat. Registrations late Friday totaled 1,972 lots.

 

"There's about 22 million bushels of deliverable wheat (between Chicago and Toledo) and export demand is quiet," one broker said. "We're expecting heavy deliveries.

 

Cash spot U.S. SRW wheat basis bids were steady to weak Monday; spot midday Gulf SRW wheat basis bids steady, grain sources said.

 

Overnight U.S. wheat export sales were quiet, while the U.S. Department of Agriculture reported early Monday weekly U.S. wheat export inspections totaled 18.085 million bushels, matching traders'estimates.

 

In global wheat news, Egypt's Ministry of Supply and Home Trade announced Sunday that Said Mahmoud Youssef El Hefni will take over as president of Egypt's main state wheat buyer, the General Authority for Supply Commodities, beginning in January.

 

In India, wheat sowings so far this year were up 26.5% on the year, at 10 million hectares, latest government data showed Monday. Therefore, the Indian government said the country's wheat output in calendar year 2006 may exceed the 72 million metric tonnes estimated for this year.

 

And the Buenos Aires Cereals Exchange forecast Monday a 2005-06 Argentine wheat crop of 11.1 million metric tonnes, down from the previous estimate of 11.6 million tonnes due to dry weather that has reduced yields and prevented the crop from developing well. The USDA last forecast an Argentine wheat crop of 12.1 million metric tonnes.

 

The CFTC is releasing its weekly U.S. commitment of trader's data Monday afternoon due to last week's holiday.

 

 

Kansas City Board of Trade

 

KCBT December ended Monday down 1/4 cent at US$3.47 1/2; and March wheat closed up 2 cents at US$3.54 3/4, boosted by a better-than-expected hard red winter wheat export inspections figure of 10.6 million bushels, brokers said.

 

A lack of follow-through technical selling allowed the gains to stand, while deferreds found light support from a lack of weekend moisture in the dry Oklahoma and Texas wheat fields, brokers said.

 

Fimat bought 400 December/March and ADM Investor Services bought 500 December/March while Fimat sold 500 December/March and FC Stonnee and Refco Inc. each sold 300 December/March, brokers said.

 

In flat price trade, Refco Inc. bought 250 March and 200 May while selling 300 December and 300 July; Prudential Financial bought 250 December and 300 March, and Goldenberg Hehmeyer bought 150 September and sold 80 December, they added.

 

The KCBT/CBOT March wheat spread ended at 40 1/2 cents, premium KCBT, after ending Friday at 41 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 outpaces that for U.S. SRW wheat.

 

Some KCBT traders said they expected up to 1,000 lots to be delivered against nearby KCBT December on Wednesday's first notice day despite good export demand; others said they expected very few deliveries amid strong demand. Cash spot U.S. HRW cash basis bids were mostly steady; spot midday U.S. Gulf HRW basis bids were steady to firm amid the strong HRW weekly export inspections figure, cash sources said.

 

The USDA will release late Monday its last 2005 weekly crop condition report.

 

Last week the government said the crop was 55% in good to excellent shape, while weekend rains may have helped Kansas and Nebraska fields but failed to replenish dry Oklahoma and Texas fields, brokers said.

 

 

Minneapolis Grain Exchange

 

MGE December ended Monday down 2 cents at US$3.62; and MGE March closed up 1/4 cent at US$3.65 3/4.

 

Refco Inc. spread 800 to 1,000 March/December while commercials sold March early and then were light buyers, brokers said.

 

Estimates differed as to the likely number of delivery notices that might be posted Wednesday; some MGE wheat traders thought very few as the December/March spread was at 4 cents, premium March.

 

Others thought 300 to 500 lots might be delivered against MGE December Wednesday due to fears of slowing export demand for higher protein U.S. wheat.

 

Cash U.S. spring wheat basis bids were mixed Monday, cash sources said.