December 28, 2005

 

US Wheat Review on Tuesday: Ends higher on speculators, holt, rinehart and winston weather

 

 

U.S. wheat futures ended higher Tuesday, led by speculative buying in Chicago Board of Trade soft red winter wheat in anticipation of early 2006 long-only index fund buying, traders said.

 

Speculative funds remain net short CBOT wheat futures, but traders anticipate an early 2006 round of buying by long-only index funds similar to that seen in early 2005.

 

"The early price action was strong enough to prevent unwinding of the recent technical strength," one CBOT broker said, noting the path of least resistance appeared late to be to the upside.

 

Kansas City Board of Trade hard red winter wheat futures were supported by strong weekly U.S. HRW wheat export inspections of 24.431 million bushels and forecasts for near-term dry, warm weather across the droughty southern U.S. HRW wheat belt, traders noted.

 

Moreover, they noted grass fires were spreading across parts of central Oklahoma, one of the top U.S. wheat producing states. Wind advisories were in effect in the Oklahoma Panhandle and western Oklahoma Tuesday afternoon. Northwest winds of 25 to 35 mph with gusts to around 45 mph are expected in the region.

 

CBOT March wheat closed Tuesday up 5 1/2 cents at US$3.40 per bushel and May ended up 6 cents at US$3.49.

 

Commodity funds bought about 5,000 lots, including late buying of 600 March by JP Morgan and buying of 500 March by Man Financial. Cargill Inc. sold 1,000 March late and bought 400 July, brokers said.

 

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

 

Overnight U.S. wheat export sales were quiet, while stronger-than-expected weekly U.S. wheat export inspections were led by inspects of hard red winter wheat.

 

In global wheat news, a U.S. Department of Agriculture attache report posted on the Foreign Agricultural Service Web site estimated Australia's 2005-06 wheat crop at 23.9 million metric tonnes.

 

Agricultural analysts in Australia recent lifted their estimates closer to 25 million tonnes.

 

Ukraine said it would buy 100,000 tonnes of intervention milling wheat for its state reserves before Dec. 29, while Indian wheat seedings remained ahead of last year's pace.

 

Wheat sowings in India covered 22.3 million hectares in the Nov. 1-Dec. 26 period, compared with 21.8 million hectares in the year-earlier period, the ministry of agriculture said Monday.

 

CBOT traders noted hot, dry forecasts for Argentina, where the wheat harvest is progressing.

 

Argentine farmers had harvested 49.2% of the 2005-06 wheat crop by Saturday, down 3% from last year's pace, the Buenos Aires Cereals Exchange reported Monday.

 

The exchange's number differed from Friday's Argentine agriculture secretariat report that farmers had harvested 58% of the crop by Thursday, down from the previous year's 61%.

 

The exchange said Monday the average yield last week was 2.56 tonnes per hectare, down from 2.67 tonnes a week earlier.

 

If the Exchange's forecast holds, it would put output down 30% from a year ago, when farmers produced a record 16.345 million tonnes. Dry weather and low wheat prices led farmers to plant less wheat this year.

 

 

Kansas City Board of Trade

 

KCBT March wheat settled Tuesday up 5 1/4 cents at US$3.85 3/4 per bushel; and May ended up 4 1/2 cents at US$3.77.

 

Man Financial sold 300 March, Man Financial bought 1,300 March, Prudential Financial bought 500 March, the Refco division of Man bought 300 March and UBS sold 300 March, brokers said.

 

In spread trade, Man Financial spread 800 May/May, they added. The KCBT/CBOT March wheat spread settled Tuesday at 45 3/4 cents, premium KCBT.

 

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

 

 

Minneapolis Grain Exchange

 

MGE March closed up 3 cents at US$3.87 per bushel; and May wheat settled up 3 cents at US$3.85 1/2.

 

Cash U.S. spring wheat basis bids were mixed Tuesday, while Minneapolis wheat rail receipts Tuesday totaled 40 cars versus 222 cars last year.