December 19, 2005

 

US Wheat Outlook on Monday: Up 2-3 cents on fund short, cold US temperatures

 

 

U.S. wheat futures were called to open up 2-3 cents Monday following firm overnight trade on expected short-covering before year-end by speculators and on concerns about U.S. hard red winter wheat crop damage amid extremely cold U.S. temperatures, brokers said.

 

Calls for a 5-7 cent higher open Monday in Chicago Board of Trade soybean futures were also supportive, they said.

 

In the overnight e-CBOT session, most-active March wheat at the CBOT closed up 2 3/4 cents at US$3.22 1/2 per bushel.

 

First resistance for CBOT March was seen at US$3.23- Friday's high - and then at US$3.26 3/4. First support was seen at US$3.18 - Friday's low--and then at US$3.15.

 

The CFTC reported late Friday that speculators for CBOT wheat futures only remained net short for the week ended December 13. They increased short holdings by 2,119 lots to hold 113,097 short positions and increased their long holdings by 2,999 lots to hold 55,966 long positions.

 

For CBOT wheat futures and options combined, speculators were short 112,031 lots, up 1,188 contracts from the week before, and long 52,763 contracts, up 2,128 lots from the previous week.

 

"In no place (CBOT ag pit) are short speculators more in danger," said one CBOT trader early Monday.

 

For KCBT wheat futures only, speculators for the week ended Dec. 13 boosted their short holdings but remained net long overall. They increased their long holdings by 534 lots to hold 39,855 long positions and increased their short holdings by 3,384 lots to hold 9,517 short positions.

 

For KCBT wheat futures and options combined, speculators were long 39,126 lots, up 672 contracts, and short 9,535 contracts, up 3,559 lots from the previous week.

 

For MGE spring wheat futures only, speculators for the week ended Dec. 13 cut their net long position, decreasing long holdings by 1,549 lots to 7,614 lots and increasing short holdings by 452 lots to 1,125 lots.

 

For MGE spring wheat futures and options combined, speculators also cut their net long position, decreasing long holdings by 1,853 lots to 7,206 contracts and boosting short holdings by 452 lots to 1,138 contracts.

 

Extremely cold U.S. temperatures early Monday also prompted concerns about potential winterkill, particularly to the hard red winter wheat crop. Dry soils in parts of Texas and Oklahoma didn't allow good crop establishment in the autumn, leaving the crop vulnerable to winter damage.

 

Cash U.S. hard red winter wheat basis bids were steady to mixed Monday, with a 4-cent gain in Hutchinson, Kan.; soft red winter wheat basis bids were steady to firm, with a 7-cent gain in Cincinnati, Ohio; and spring wheat basis bids were steady to weak, grain merchandisers said.

 

Weekend U.S. wheat export sales were quiet. The U.S. Department of Agriculture's Commodity Credit Corporation said late Friday it purchased 19,610 metric tonnes of U.S. soft white wheat for Bangladesh.

 

In global wheat news, India said wheat plantings covered 20.7 million hectares in the Nov. 1-Dec. 19 period, compared with 19.2 million hectares last year.

 

U.S. wheat traders have closed watched Indian wheat sowings this year as India's wheat supplies are scant, mandating a good crop if imports are to be avoided.

 

Australia's monopoly wheat exporter AWB Ltd. (AWB.AU) Monday left unchanged its estimate of returns from sales of its benchmark wheat type grown this crop year ending March 31, 2006, reflecting relatively steady commodity and currency markets.

 

AWB estimated its benchmark new crop Australian Premium White type wheat of 10% protein still will return a gross AUS$188 a metric tonne (FOB) from the previous review a week earlier.

 

AWB also left unchanged estimates for all other new crop grades of wheat.

 

In other news from Australia, harvest of winter crops including wheat in most areas of Western Australia state was starting to wind down, though some growers in the far south waited for favorable conditions to begin their harvest, storage and handling concern Cooperative Bulk Handling Ltd. said Monday.