December 22, 2005
US Wheat Review on Wednesday: Ends mostly weak on technical setback
U.S. wheat futures ended mostly lower Wednesday in a setback from Tuesday's one-month highs, brokers said.
"We bounced off a contract low in CBOT March wheat at US$3.07 and hit a high yesterday at US$3.29," said Shawn McCambridge, a grains analyst at Prudential Financial.
"During that time, we really didn't have any change in the fundamentals," he said. "Bouncing off the contract low was warranted because we were oversold at that point, and bouncing up to US$3.15 to US$3.20 (basis CBOT March) would be a nice consolidation."
"But a lot of this is that the funds are short and when the funds start getting into the market(s), the fundamentals kind of step to the sidelines until their program is complete," he said.
Trade was modest Wednesday before the year-end holidays.
U.S. wheat futures markets will close at 1 p.m. EST Friday and are closed Monday. The same pattern will be repeated next year ahead of the New Year.
CBOT March wheat closed Wednesday down 1/2 cent at US$3.27 1/2 per bushel, and May ended down 1/4 cent at US$3.37.
Funds ended about even, after Fimat USA bought 500 March early. Calyon Financial and UBS each sold 200 March while Citigroup bought 200 July and O'Connor and Co. bought 200 March, brokers said.
Cash spot U.S. SRW wheat basis bids were mixed Wednesday; and spot midday Gulf SRW wheat basis bids firmed 2 cents per bushel, grain sources said.
Overnight U.S. wheat export sales were quiet, while traders forecast the USDA would report Thursday weekly U.S. wheat export sales totaled 400,000 to 600,000 metric tonnes.
Japan sought 45,000 tonnes of U.S. wheat in an overall tender for 85,000 tonnes of wheat that will conclude Thursday.
In global wheat news, Argentine farmers will harvest 12 million metric tonnes of wheat in 2005-06, the Agriculture Secretariat said Wednesday.
Also in South America, Brazil's wheat imports will rise to roughly 5.8 million metric tonnes in 2006, one million more than Brazil has imported in 2005, according to the Brazilian Wheat Industry Association, or Abitrigo.
Ukraine's agriculture ministry said the country's grain stocks would be sufficient to last until the beginning of the next marketing year, July 1.
The ministry forecast that 8.9 million metric tonnes of grain harvested in 2005 will be left over when the 2006-2007 marketing year begins.
Russia's 2005 grain harvest in 2005 was 78.1 million metric tonnes in clean weight, about the same amount as in 2004, final figures released by the federal statistics service Wednesday showed.
Kansas City Board of Trade
KCBT March wheat settled Wednesday down 3 cents at US$3.71 1/2 per bushel, just above its 50-day moving average of US$3.70, and May ended down 1 cent at US$3.65.
"The markets' failure to take out key overhead resistance yesterday led to a light volume long liquidation trade today," one KCBT source said. "Clearly, the market needs new export business or a confirmed winter kill outbreak to penetrate overhead resistance."
ADM Investor Services sold 300 March, FC Stonnee sold 200 March and 50 May, Frontier Trading bought 300 March, the Refco division of Man Financial bought 150 March, and UBS bought 400 March, brokers said.
In spread trade, ADM Investor Services bought 200 March/July, they added.
The KCBT/CBOT March wheat spread settled Wednesday at 44 cents, premium KCBT, after settling Tuesday at 46 1/2, premium KCBT.
Forecasts called for dry, warmer near-term conditions for the dormant U.S. hard red winter wheat crop.
Cash spot U.S. HRW cash basis bids were mostly steady Wednesday; spot midday U.S. Gulf HRW basis bids were steady Wednesday, cash sources said.
Minneapolis Grain Exchange
MGE March closed down 2 1/2 cents at US$3.77 per bushel, above its 50-day moving average of US$3.76 1/2; and May wheat settled down 1 1/4 cents at US$3.75 1/4.
Cash U.S. spring wheat basis bids were mixed Wednesday, while Minneapolis wheat rail receipts Wednesday totaled 260 cars versus 83 cars last year.
