December 21, 2005

 

US Wheat Review on Tuesday: Higher, led by fund buying in CBOT

 

 

U.S. wheat futures settled higher Tuesday on speculative buying in Chicago Board of Trade soft red winter wheat futures, where commodity funds are net short about 54,000 lots and also on a notable lack of selling interest, brokers said.

 

"Sellers are eyeing fund stops at the 50-day moving average (US$3.28 1/4) and above in CBOT March," one CBOT broker said. "They figure they can sell at higher prices when the stops are triggered."

 

Dry weather forecasts for the southern U.S. hard red winter wheat belt weather supported new-crop Kansas City Board of Trade wheat futures, brokers said.

 

CBOT March wheat closed Tuesday up 4 3/4 cents at US$3.28 per bushel, and May ended up 5 1/4 cents at US$3.37 1/4.

 

Commodity funds bought more than 3,000 lots, led by late buying from O'Connor and Fimat Futures. R.J. O'Brien was a late seller of March, brokers said.

 

Earlier in the session, O'Connor and Co. bought 1,000 March, Calyon Financial bought 600 March, R.J. O'Brien, Rand Financial, Tenco Inc. and Man Financial each bought 500 March and Fimat sold 200 March, they said.

 

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

 

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

 

In global wheat news, Australia's current crop could total 25.0 million metric tonnes, well above last year's 20.4 million tonnes, according to a report Tuesday on Australian Broadcasting Corp. radio.

 

On Dec. 11, the Australian Bureau of Agricultural and Resource reiterated its current new wheat crop forecast of 24.1 million tonnes, which remains around the midpoint of wheat exporter AWB Ltd.'s (AWB.AU) current forecast range. The USDA last forecast a 2005-06 Australian wheat crop of 24 million tonnes.

 

After domestic Australian annual demand of about 5.5 million tonnes of wheat is met, the balance is available for export.

 

Chinese agricultural experts said Tuesday that the country's crop hadn't been harmed by recent cold weather.

 

The USDA reported Dec. 9 that the Chinese wheat crop would be 96 million metric tonnes, up 1 million from its November forecast.

 

Wheat buyers in Egypt, the second largest wheat importer worldwide after China, said Tuesday that Black Sea imports would continue to be a feature amid competitive prices and speedier deliveries than other global wheat sellers.

 

Egyptian officials also noted the quality of Russian wheat was suitable for the Egyptian market.

 

And in Europe, analysts expected French wheat exports to pick up next quarter as Black Sea sales slow due to crop production worries in the latter region.

 

 

Kansas City Board of Trade

 

KCBT March wheat settled Tuesday up 3 1/2 cents at US$3.74 1/2 per bushel, above its 50-day moving average of US$3.70 1/4 and May ended up 3 1/4 cents at US$3.66.

 

ADM Investor Services sold 400 March, Cargill Inc. bought 100 July and sold 100 March, FC Stonnee sold 300 march and 800 July; Fimat bought 300 March; Man Financial bought 900 March and Prudential Financial bought 300 March, brokers said.

 

The KCBT/CBOT March wheat spread settled Tuesday at 46 1/2, premium KCBT.

 

Forecasts for dry, warmer weather across the southern U.S. hard red winter wheat belt underpinned deferred new-crop KCBT wheat, brokers said.

 

"It's dry for as far out as we can see, although you don't really feel comfortable going out much beyond 7 to 10 days," said Mike Palmerino, meteorologist at Meteorlogix weather service. "Temperatures are going to warm up, with highs in the 50s to low-60s (Fahrenheit) in the southern areas beginning Wednesday and continuing into early next week.

 

"The overriding influence is that there's no moisture in the forecast," Palmerino said.

 

"That is just going to continue to keep this crop under stress and and leave it much more susceptible to turns to colder weather or very windy conditions," he added. "This crop is more vulnerable than normal because of this dryness."

 

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

 

 

Minneapolis Grain Exchange

 

MGE March closed up 2 1/2 cents at US$3.79 1/2 per bushel, above its 50-day moving average of US$3.76 3/4; and May wheat settled up 2 1/2 cents at US$3.76 1/2.

 

Cash U.S. spring wheat basis bids were steady to lower Tuesday, while Minneapolis wheat rail receipts Tuesday totaled 227 cars versus 210 cars last year.