December 7, 2005

 

US Wheat Review on Tuesday: Ends lower on speculative sales

 

 

U.S. wheat futures settled lower Tuesday on a setback from Monday's speculative-led gains, on weakening U.S. winter wheat cash basis bids and losses in Chicago Board of Trade soy, brokers said.

 

News of an imminent Iraqi purchase of 200,000 tonnes of U.S. wheat failed to lift the market, while winterkill fears amid cold U.S. temperatures also didn't offer any punch, they said.

 

After the U.S. wheat futures markets closed Tuesday, Egypt tendered for 50,000 to 60,000 tonnes of wheat for shipment Jan. 16-31.

 

CBOT December wheat ended Tuesday down 4 3/4 cents at US$2.99 3/4, and March settled down 4 1/2 cents at US$3.15 3/4, below the 10-day moving average of US$3.16 1/2.

 

ABN Amro and Iowa Grain each sold about 1,000 March, while Fimat Futures, Prudential Financial and R.J. O'Brien were light sellers of March, brokers said. Man Financial bought 600 March and sold 500 December 2006, and Deutsche Bank bought about 500 December 2006 early.

 

There were 737 deliveries posted Monday against CBOT December wheat, with Henning Carey the largest stopper at 387 lots.

 

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

 

In global wheat news, India said that it planned to sell about 400,000 metric tonnes of wheat in the open market before March 2006 to ensure price stability and ample domestic supplies.

 

U.S. wheat traders have been hoping India will need to import grain before March.

 

Japan said it would tender for 125,000 tonnes of wheat on Thursday, including 44,000 tonnes of U.S. western white and dark northern spring wheat.

 

And Australia's monopoly wheat exporter AWB Ltd. (AWB.AU) Tuesday said that it will export 18.5 million metric tonnes of wheat in 2005-06, and that it will bid for supply of wheat to Iraq as and when the country floats tenders.

 

AWB's managing director also said the company was planning to increase its exports to China in the current year. The company already sold 2.5 million tonnes wheat to China last year.

 

AWB is also planning to set trading arms in countries in eastern Europe and Latin America, the company's director said.

 

Statistics Canada is scheduled to report production on Wednesday, while analysts forecast the U.S. Department of Agriculture would slightly lower its U.S. 2005-06 wheat end stocks Friday to 526 million bushels from last month's 530 million.

 

 

Kansas City Board of Trade

 

KCBT December wheat settled down 4 cents at US$3.63, and March wheat ended down 3 1/4 cents at US$3.67 1/2.

 

Frontier Trading sold 280 May and bought 200 March; ADM Investor Services sold 200 March; Man Financial sold 150 March and 100 May while buying 100 July; Prudential Financial sold 200 March and 50 July; and Refco Inc. sold 100 March and bought 100 May, brokers said.

 

Fimat Futures spread 200 May/March; ADM Investor Services spread 200 March/July and 100 July/March; and Man Financial spread 260 March/July, brokers said.

 

The KCBT/CBOT March spread settled Tuesday at 51 3/4 cents, premium KCBT; the spread closed Monday 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 77 deliveries and 19 redeliveries posted Tuesday against KCBT December wheat. Term Commodities stopped all 96 lots.

 

Cash spot U.S. HRW cash basis bids were steady to weak Tuesday; spot midday U.S. Gulf HRW basis bids were steady, sources said.

 

 

Minneapolis Grain Exchange

 

MGE December wheat ended down 2 1/4 cents at US$3.66 3/4, and MGE March closed 3 1/2 cents at US$3.71 per bushel, slightly below the 10-day moving average of US$3.71 1/4.

 

No deliveries were posted against Minneapolis Grain Exchange December wheat Tuesday.

 

Cash U.S. spring wheat bids were steady to mixed Tuesday, while Minneapolis wheat rail receipts Tuesday slowed to 97 cars versus 110 cars last year and after recent heavy receipts.