December 15, 2005

 

US Wheat Review on Wednesday: Ends higher on fund buying; HRW crop eyed

 

 

U.S. wheat futures ended higher Wednesday on speculative fund buying, with Kansas City Board of Trade March supported by technical buying as prices topped the 100- and 200-day moving averages, brokers said.

 

The speculative buying followed news that Goldman Sachs estimated fair value for U.S. wheat at US$4.02 per bushel, well above current Chicago Board of Trade wheat prices.

 

"I'd pay attention to anyone who has US$30 billion to trade," one CBOT wheat broker said, referring to the influence of the GSCI Index in the CBOT wheat market.

 

Moreover, traders anticipate long-only commodity index funds will enter the market again in early 2006 as they did last year; a certain amount of front-running has been noted as CBOT wheat open interest this week has risen along with prices.

 

Deferred KCBT wheat futures rallied Wednesday on forecasts for another potential round of extremely cold temperatures next week across U.S. HRW wheat growing regions.

 

Still, Mike Palmerino of Meteorlogix noted snow of up to 5 inches should fall across top HRW wheat growers Kansas, Oklahoma and Texas ahead of the cold Arctic air.

 

The U.S. SRW wheat crop is generally less vulnerable to winterkill threats after a wetter autumn allowed better root establishment and amid generally heavier snowcover.

 

CBOT March closed Wednesday up 5 1/4 cents at US$3.23 3/4, and CBOT December wheat expired up 5 1/2 cents at US$3.09 1/2.

 

Commodity funds were net buyers of about 2,400 lots, brokers said. The Refco division of Man bought 700 December 2006 lots and 500 March, Citigroup bought 500 March and Tenco Inc. sold 1,000 March, they noted.

 

There were 197 deliveries posted against CBOT December wheat on Wednesday, with the ADM Investor Services house account stopping all 197 lots.

 

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

 

Overnight U.S. wheat export sales were quiet, while Cuban officials signed a letter of intent Wednesday to buy 500,000 metric tonnes of U.S. wheat during the 2006 calendar year, the U.S. Wheat Associates said.

 

Little impact was seen from Informa Economics' release Wednesday of a U.S. winter wheat plantings estimate of 41.8 million acres, up from last year's 40.320 million.

 

"Larger acreage was expected, especially in the soft red winter wheat, and I think that card has been played," one CBOT wheat broker said.

 

In global wheat news, the French state grains board, Office National Interprofessionnel des Cereales, or ONIC, Wednesday estimated 2005-06 French soft wheat output at 35.697 million metric tonnes, little changed from the November forecast of 35.600 million tonnes and up slightly from last year's 35.581 million tonnes.

 

Meanwhile, U.K. wheat ending stocks for 2005-2006 are estimated at 2.058 million metric tonnes, unchanged from previous estimates made in October and up 2% on the year, the Department for Environment, Food and Rural Affairs said Wednesday.

 

 

Kansas City Board of Trade

 

KCBT March wheat settled up 6 cents at US$3.66, above its 200-day moving average of US$3.60 1/2, and December expired up 8 cents at US$3.61.

 

ADM Investor Services sold a net 400 March, Frontier bought a net 200 March, Fimat bought a net 100 March and 150 July, Prudential Financial sold a net 160 March and 100 July and UBS bought 100 March and sold 300 July, brokers said.

 

There were no deliveries posted Wednesday against Kansas City Board of Trade.

 

The KCBT/CBOT March wheat spread settled Wednesday at 42 1/4 cents, premium KCBT.

 

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

 

 

Minneapolis Grain Exchange

 

MGE March closed up 4 cents at US$3.74 1/2 per bushel and December wheat expired up 3 1/2 cents at US$3.70 1/2.

 

There were 2 deliveries posted Wednesday against Minneapolis Grain Exchange December wheat, with the oldest long date of Dec. 12.

 

Cash U.S. spring wheat bids were steady to firm Wednesday, while Minneapolis wheat rail receipts Wednesday totaled 165 cars versus 227 cars last year.