December 6, 2005

 

US Wheat Review on Monday: Ends mixed on specs, firm cash, exports

 

 

U.S. wheat futures ended mixed Monday despite a late paring of speculative-led gains, on commodity fund buying, steady to firm U.S. cash wheat basis bids and better-than-expected U.S. weekly wheat export inspections of 19.3 million bushels, brokers said.

 

Hopes that Iraq might soon announce more wheat purchases continued to circulate, they noted.

 

The U.S. Wheat Associates, a group representing U.S. exporters, said Monday that "Iraq has been inquiring about additional supplies."

 

Finally, cold temperatures across the central U.S. this week were not seen significantly harming dormant HRW winter wheat, meteorologists said Monday.

 

"Right now our general thinking is that it's probably not going to be cold enough in the areas lacking snowcover to cause any damage," said Joel Widenor, meteorologist at Cropcast Weather Services. "But it will be a very close call."

 

"We're looking for lows to drop below zero - a chance really the next three mornings, but especially on Wednesday morning across quite a bit of Nebraska," Widenor said. "Those areas should have enough snow cover to prevent any problems."

 

"There will also be a chance in eastern Colorado to see those kinds of readings," he added. "Otherwise, we're pretty much looking for Kansas to bottom out in the single digits - southeastern Kansas will probably be like lower teens and then as you work your way further south from there, to the areas that are pushing toward dormancy at this point, we're looking for northwestern Texas and Oklahoma to be in the teens on their coldest day."

 

Mike Palmerino of Meteorlogix weather service agreed.

 

"The biggest threat still to this wheat crop is the dryness in southern and western (U.S. Southern Plains hard red winter wheat) areas," he said. "At this point, the wind does not appear to be that much of a factor. I don't see any major wind storms blowing through there in the next week or two."

 

CBOT December wheat ended Monday up 1 cent at US$3.04 1/2, and March settled up 1/2 cent at US$3.20 1/4.

 

Commodity funds bought about 2,100 lots, brokers said. Deutsche Bank bought 2,000 December 2006 lots, ABN Amro bought 700 March, Calyon Financial bought 500 March and Citigroup bought 400 March, brokers said.

 

Iowa Grain sold 1,500 March and Refco Inc. sold 1,000 July, they noted.

 

Hopes that index fund monies may in early 2006 flow into CBOT ag markets, as was seen in early 2005, may continue to underpin U.S. wheat futures into 2006, they noted.

 

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

 

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

 

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

 

"The fact we weren't shut out completely is bullish," one CBOT wheat broker said.

 

Traders continued to eye Southern Hemisphere wheat harvest and marketing reports, noting Argentina's year-on-year wheat exports fell 41% during September to 388,285 metric tonnes. The declining sales are in part a result of heavy buying earlier in the year amid Argentina's record harvest, Argentine Secretariat officials say.

 

 

Kansas City Board of Trade

 

KCBT December wheat settled up 1 cent at US$3.67, and March wheat ended up 1/2 cent at US$3.70 3/4.

 

Man Financial bought 700 March while Prudential Financial bought 250 March, brokers said.

 

The KCBT/CBOT March spread settled 50 1/2 at cents, premium KCBT; the spread also closed Friday at 50 1/2 cents.

 

The KCBT/CBOT spread, along with buying high-protein MGE futures and selling CBOT wheat, became popular this summer as demand for higher-protein U.S. food wheat began outpacing that for lower-protein U.S. wheat.

 

There were 20 deliveries and 167 redeliveries posted Monday against KCBT December wheat.

 

Cash spot U.S. HRW cash basis bids were steady to firm Monday; spot midday U.S. Gulf HRW basis bids were up 2 cents, sources said.

 

In related news, the KCBT Monday announced a record sales price of a Class "A" or full membership (share) of US$175,000. This record breaks the previous record of US$165,000, set on Nov.

 

 

Minneapolis Grain Exchange

 

MGE December wheat ended down 2 1/2 cents at US$3.69, and MGE March closed down 1/2 cent at US$3.74 1/2 per bushel.

 

There were 522 deliveries posted Monday against MGE December wheat, the first deliveries so far in this cycle.

 

Country Hedging delivered all 522 lots while ADM stopped 256 lots and Prudential Financial accepted 266 lots.

 

Cash U.S. spring wheat bids steady to firm Monday, while Minneapolis wheat rail receipts Monday totaled 237 cars versus 196 cars last year.