December 20, 2005

 

US Wheat Review on Monday: Ends up on speculative buying, soy rally

 

 

U.S. wheat futures settled higher Monday, with Kansas Board of Trade May hard red winter wheat rallying to a one-month high on KCBT/CBOT spreads and Chicago Board of Trade wheat up on speculative buying amid a hefty net fund short stance ahead of year-end, brokers said.

 

"The market is not trading fundamentals, but money flow is supportive," one CBOT broker said. "We think (CBOT) March wheat needs to rally about another dime to begin shaking out some of the big speculative fund money."

 

Commodity funds were thought to be net short about 54,000 CBOT wheat futures or about 112,000 on a gross wheat futures and options basis, they noted.

 

Support also stemmed from late speculative led gains Monday in CBOT soybeans and soymeal, they noted.

 

CBOT March wheat closed Monday up 3 1/2 cents at US$3.23 1/4 per bushel, and May ended up 3 1/4 cents at US$3.32.

 

Commodity funds were net buyers, led by early buying by Calyon Financial of 300 March and the Refco division of Man Financial of 800 July, brokers said. Cargill Inc. sold 200 March and Fimat sold 300 March, brokers said.

 

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

 

Cash spot U.S. SRW wheat basis bids were steady to firm Monday; and spot midday Gulf SRW wheat basis bids were up 2 cents, grain sources said.

 

Weekly U.S. wheat export inspections, at 16.394 million bushels, were at low end of estimates but topped again by HRW and HRS wheat inspects.

 

 

Kansas City Board of Trade

 

KCBT March wheat settled Monday up 3 1/2 cents at US$3.71 per bushel, above its 50-day moving average of US$3.70 1/2; and May ended up 2 3/4 cents at US$3.62 3/4.

 

ADM Investor Services sold 700 KCBT March and 100 July, FC Stonnee sold 150 March; Man Financial bought 400 March and UBS bought 250 March, brokers said.

 

In spread trade, Fimat bought 150 KCBT March/May and UBS spread 100 March/July, they noted.

 

The KCBT/CBOT March wheat spread settled Monday at 47 3/4, premium KCBT, steady with Friday's close. The KCBT/CBOT May wheat spread ended Monday at 30 3/4, premium KCBT.

 

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

 

Dry, warmer conditions were seen this week for the vulnerable U.S. HRW wheat belt, but KCBT traders noted that forecasts called for a chance of cold Arctic air in three weeks - a forecast that led some bulls to speculate that heaving damage could occur.

 

Moreover, one KCBT trader noted that talk of potential crop damage in China was a new twist. China was a large buyer of U.S. SRW wheat last year, but its relative absence this year of U.S. purchases has weighed on CBOT futures.

 

 

Minneapolis Grain Exchange

 

MGE March closed up 3 1/4 cents at US$3.77 per bushel, just above the 50-day moving average of US$3.76 3/4; and May wheat settled up 3 cents at US$3.74.

 

Cash U.S. spring wheat basis bids were steady to firm Monday, while Minneapolis wheat rail receipts Monday totaled 67 cars versus 184 cars last year.