December 7, 2005

 

US Wheat Outlook on Wednesday: Down 1/2-1 cent on Egypt buy, Statistics Canada

 

 

U.S. wheat futures were called to open down 1/2 cent to 1 cent per bushel, with possible deeper losses after the opening bell, on a larger-than-expected Canadian wheat production figure, up 3.6% from last year's crop; and Egypt's purchase of solely Russian wheat in an overnight tender, brokers said.

 

Statistics Canada reported Wednesday that Canada's 2005-06 wheat production should total 26.78 million metric tonnes, up from its October estimate of 25.547 million tonnes and last year's 25.860 million tonnes.

 

In overnight export news, which was disappointing for U.S. wheat producers, Egypt bought 85,000 metric tonnes of Russian wheat and no U.S. grain.

 

"It's definitely a disappointment," said Shawn McCambridge, a grain analyst at Prudential Financial. "With Russia in there, it displaces a traditional seller as far as marketshare. And pricewise, with it coming in roughly US$3 below soft white wheat offers from the U.S. and US$16 below soft red (offers), it sends a message to the market that Egypt will be very selective, as always and look for lower prices.

 

"The only caveat is that they only bought Russian wheat and only bought 85,000 tonnes, so it's not like they bought 400,000 to 500,000 tonnes with the EU and others involved," he added.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed up 1/4 cent at US$3.16 per bushel.

 

There were 827 deliveries posted against CBOT December wheat on Wednesday, with USA Blue, Century Division of Man Financial and Henning Carey noted stoppers.

 

There were zero deliveries posted Wednesday against Kansas City Board of Trade December wheat.

 

No deliveries were posted against Minneapolis Grain Exchange December wheat on Wednesday.

 

Cash U.S. hard red winter wheat basis bids were mixed Wednesday; soft red winter wheat basis bids were steady to weak; and spring wheat basis bids were mixed, with a 10-cent loss in Minneapolis and a 5-cent loss in Duluth, Minn., grain merchandisers said.

 

Traders continued to eye forecasts for precipitation late Wednesday and Thursday across parts of the dry Southern Plains hard red winter wheat belt and eyed temperatures for signs of winterkill.

 

"The winter wheat acreage increase this year tempers that a little bit, and also it's (winterkill) too hard to determine whether damage took place or not until the crop breaks dormancy," said Prudential's McCambridge said. "You can try to quantify any losses all winter long, but we have seen crops that looked that they were totally dead coming out of the winter totally flourish. It's very difficult to say 'this much has been lost.'"