December 5, 2005

  

US Wheat Outlook on Monday: Steady-Firm on cold US temperatures

 

 

U.S. wheat futures were called to open steady to firm Monday as extremely cold U.S. temperatures were seen lessening farmer wheat sales and prompting crop condition concerns; and as weekend U.S. wheat export sales business was seen as mostly neutral, brokers said.

 

Temperatures on Monday across the U.S. Southern Plains hard red winter wheat belt were forecast at 28-44 Fahrenheit (-2 to 7 Celcius), while readings Tuesday were seen at 20-47F (-7 to 8C) and Wednesday's temperatures were expected to be below normal.

 

U.S. Midwest soft red winter wheat belt temperatures were also expected to remain below normal through Friday, meteorologists said.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed down 1/4 cent at US$3.19 1/2 per bushel.

 

First resistance for CBOT March was seen at US$3.23 1/2 - last week's high - and then at US$3.25. First support was put at US$3.19 - Friday's low - and then at US$3.17.

 

There were 1,255 deliveries posted Monday against CBOT December wheat, with only scattered stoppers.

 

There were 20 deliveries posted Monday against Kansas City Board of Trade December wheat and 167 redeliveries, with Term Commodities accepting all 187 lots.

 

In weekend U.S. wheat export business, Egypt bought 105,000 tonnes of U.S. wheat in an overall tender for 505,000 metric tonnes.

 

Egypt bought 30,000 tonnes of Russian wheat from Silverstone at US$124.95 per tonne, three cargos, each 60,000 tonnes of Australian soft wheat at US$127.40/tonne, 60,000 tonnes of Australian hard wheat at US$163.50/tonne from the Australian Wheat Board, 60,000 tonnes of U.S. soft white wheat at US$127.30/tonne from Columbia Grain, 55,000 tonnes of U.S. hard red winter wheat at US$167.99 from Cargill, 60,000 tonnes of French wheat at US$127.49 from Louis Dreyfus and 60,000 tonnes of French wheat at US$127.49 from Lecurer, sources said.

 

Taiwan Flour Millers Association said it would tender Wednesday to buy 80,000 tonnes of U.S. No. 1 wheat, an association official said Monday.

 

Also in Asia, China's eastern Shandong province sold about 79,000 metric tonnes of local wheat reserves out of the approximate 90,000 tonnes it put up for auction Nov. 30, an auction official said Monday.

 

In other global wheat news, Australian grain analysts forecast a continued rise in wheat production, with output possibly stretching to 40 million metric tonnes in several decades.

 

Australia's 2005 wheat crop has been forecast at about 24 million metric tonnes. The biggest crop to date was 25.7 million tonnes in 2003-04.

 

But in the long term, production could grow to 40 million tonnes a year or more, believes Peter Reading, managing director of industry-and government-funded Grains Research & Development Corp.

 

After current domestic demand of about 5.5 million tonnes is met, the balance of the crop is available for export, sometimes earning in excess of AUS$4.5 billion a year. However, domestic use of grain in Australia, in the livestock industry and for ethanol production, is also expected to rise in the coming years.

 

The CFTC reported late Friday that speculators for CBOT wheat futures only remained net short for the week ended Nov. 29. They decreased short holdings by 1,828 lots to hold 102,254 short positions and decreased their long holdings by 1,900 lots to hold 48,554 long positions.

 

For CBOT wheat futures and options combined, speculators were short 102,797 lots, down 1,183 contracts from the week before, and long 46,600 contracts, down 1,918 lots from the previous week.

 

For KCBT wheat futures only, speculators for the week ended November 29 cut their net long stance. They decreased their long holdings by 2,409 lots to hold 36,603 long positions and increased their short holdings by 279 lots to hold 9,212 short positions.

 

For KCBT wheat futures and options combined, speculators were long 35,780 lots, down 849 contracts, and short 8,639 contracts, up 1,183 lots from the previous week.

 

For MGE spring wheat futures only, speculators for the week ended Nov. 29 also remained net long, increasing long holdings by 230 lots to 8,850 lots and increasing short holdings by 589 lots to 640 lots.

 

For MGE spring wheat futures and options combined, speculators remained net long, increasing long holdings by 256 lots to 8,724 contracts and boosting short holdings by 597 lots to 648 contracts.