December 17, 2005

 

US Wheat Review on Friday: Mostly up on speculative buying

 

 

U.S. wheat futures ended mostly higher Friday, led by light speculative buying in Chicago Board of Trade wheat futures amid a near- record fund short stance and following 4-5-cent gains in nearby CBOT soybeans, brokers said.

 

Quiet overnight U.S. wheat export sales and moderating forecasts for southern hard red winter wheat weather limited gains, they noted.

 

CBOT March wheat closed Friday up 1 cent at US$3.19 3/4 per bushel.

 

Commodity funds bought about 2,500 contracts, led by Deutsche Banc's early buying of 500 December 2006. Prudential Financial sold 500 March while Refco bought 500 March.

 

"Volume was relatively light," one pit broker said, while another noted that short-covering might appear the last week of December 2005 as traders anticipated long-only hedge funds might enter the market early next year.

 

There were no deliveries posted against CBOT December wheat on Friday; last delivery day is Dec. 23.

 

Cash spot U.S. SRW wheat basis bids were steady to weak Friday, with a 4-cent loss in Cincinnati; and spot midday Gulf SRW wheat basis bids were steady, grain sources said.

 

The USDA's Commodity Credit Corporation said late Thursday it purchased 30,730 metric tonnes of U.S. hard red winter wheat for Kenya.

 

In global wheat news, Argentina said 45% of its 2005-06 wheat harvest had been gathered by Thursday.

 

 

Kansas City Board of Trade

 

KCBT March wheat settled Friday up 1 cent at US$3.67 1/2 per bushel.

 

ADM Investor Services sold 700 March and bought 200 July, Cargill Investor Services bought 200 March, FC Stonnee sold 100 May and 200 July, Man Financial bought 200 March, UBS bought 300 March and Refco Inc. bought 150 July and sold 100 May.

 

Cargill Inc. bought 200 March/May while ADM Investor Services sold 150 July/March, brokers said.

 

There was one delivery posted Friday against expired KCBT December 2005 wheat.

 

The KCBT/CBOT March wheat spread settled Friday at 47 3/4, premium KCBT, after easing earlier this week.

 

Cash spot U.S. HRW cash basis bids were mostly steady to up 4 cents at the Texas Gulf on Friday; spot midday U.S. Gulf HRW basis bids steady, cash sources said.

 

Less severe forecasts for next week's Southern Plains hard red winter wheat belt limited gains in deferred KCBT contracts, brokers said.

 

Only light precipitation was expected Saturday, then dry conditions through Thursday, said Mike Palmerino of Meteorologix. Fields in Texas and Oklahoma are extremely dry and could use additional precipitation.

 

Temperatures were expected to be below to much-below normal, with lows between 5 degrees in the north HRW belt to the upper teens to mid-20s in the south through Monday. Temperatures were then forecast to warm to near to above-normal next week.

 

"Everything still revolves around the lack of moisture in Texas and Oklahoma and there is no indication that that is going to change next week," Palmerino said. "There is a hint that there may a little better chance of precipitation late next week, but this forecast is questionable. The long-term forecasts change dramatically from day to day."

 

 

Minneapolis Grain Exchange

 

MGE March closed up 1/4 cent at US$3.73 3/4 per bushel.

 

There were no deliveries posted Friday against expired MGE December 2005 wheat.

 

Cash U.S. spring wheat bids were steady Friday, while Minneapolis wheat rail receipts Friday totaled 168 cars versus 127 cars last year.