January 13, 2006
US Wheat Review on Thursday: Higher, led by kansas city board of trade on USDA seedings data
U.S. wheat futures settled higher Thursday, led by Kansas City Board of Trade hard red winter wheat futures after the U.S. Department of Agriculture reported 2006 U.S. HRW wheat plantings totaled 29.9 million acres, down 900,000 acres from the average analyst estimate of 30.8 million, brokers said.
The seedings figure, which also lagged year's plantings of 29.936 million acres, refueled concerns about tight U.S. hard red winter wheat supplies as a lingering U.S. drought could be slashing yield and demand remains good.
Still, some traders noted questions about the Nebraska and Montana seeding figures.
CBOT wheat futures traded both sides Thursday, pressured by weakness in neighboring corn and soybean futures and after the USDA reported U.S. soft red winter wheat plantings at 7.30 million acres, in line with the average trade estimate and up 19% or 1.2 million acres from last year.
Liquidation of CBOT corn/wheat spreads and index fund buying, for the fourth day this week, underpinned CBOT wheat, they said. Commodity index funds, which buy and hold positions, have bought about 3,000 CBOT wheat contracts each day this week in an annual rebalancing act, brokers said.
U.S. white winter wheat seedings were projected at 4.2 million acres, below the average trade estimate of 4.47 million and just below last year's 4.3 million acres.
The USDA's forecast for a slight increase in both U.S. and world ending wheat stocks played second fiddle to the seedings estimates, brokers said.
U.S. wheat 2005-06 ending stocks were forecast at 542 million bushels, up from the USDA's December estimate of 530 million; and 2005-06 world wheat carryout was seen at 144.7 million metric tonnes, up from the government's forecast last month of 143.4 million tonnes.
CBOT March wheat ended Thursday up 2 3/4 cents at US$3.33 1/4; while May ended up 2 3/4 cents at US$3.44 per bushel.
Commodity funds were net buyers, brokers said. Fimat Futures bought about 1,800 March and 500 May, Tenco Inc. bought about 1,000 CBOT March wheat and sold 1,000 March corn, Calyon Financial bought about 400 March, ABN Amro sold 600 March and the Refco division of Man Financial sold 500 March, brokers said.
Midday Gulf spot cash soft red winter wheat basis bids were steady and cash interior basis bids were steady to firm, cash sources said.
In global wheat news, the European Union granted Thursday export licenses for 194,500 metric tonnes of subsidized free-market wheat at a maximum refund of EUR9.00/tonne in its weekly tender Thursday. The figure compared with last week's 356,000 tonnes of wheat licenses granted at EUR8.49/tonne.
The E.U. also granted 88,663 metric tonnes of grain Thursday in a tender to transfer cereal to Spain, which was severely hit by drought this year.
Indian wheat sources said the country's crop could reach 74 million to 76 million metric tonnes this year depending on upcoming weather. India produced 72 million tonnes of wheat last year.
Kansas City Board of Trade
KCBT March wheat settled Thursday up 7 3/4 cents at US$3.82 3/4 per bushel, above its 10-day moving average of US$3.81 3/4; while May ended up 8 cents at US$3.81 3/4.
Commodity funds built on a large net long position in KCBT wheat, brokers said. The Refco division of Man Financial was an early buyer of May and July while selling 700 March; ADM sold about 1,000 March; FC Stonnee bought 200 July and 300 December, and Fimat bought 200 March and 300 December, brokers said.
The KCBT March/CBOT March wheat spread settled at 49 1/2 cents, premium KCBT, after closing Wednesday at 44 1/2 cents, again a reflection of tight U.S. HRW stocks contrasting with ample SRW supplies.
Deferred KCBT new-crop futures found support from mounting crop concerns despite Thursday's forecasts for light rains next week, brokers said.
"The system for Monday doesn't look as impressive as yesterday when we were thinking just some light rain or snow in the western areas," said Mike Palmerino, a meteorologist at Meteorlogix weather service. "The latest guidance is a little faster-moving with the system, so we had to just fall back to just calling for light rain or snow throughout the HRW belt on Monday.
"The other situation we were looking at is a potential for Friday next week," Palmerino said. "That actually looks a little better today than it did yesterday, but it's still pretty far out in the future. There are still hints that we could be seeing a return to a more normal rainfall or precipitation pattern in the HRW belt as we go out toward the end of next week and the week of Jan. 22."
Minneapolis Grain Exchange
MGE March closed Thursday up 4 3/4 cents at US$3.91 1/4 and May wheat settled up 6 3/4 cents at US$3.92.
Cash U.S. spring wheat basis bids were steady Thursday, sources said.
Minneapolis rail receipts of wheat on Thursday totaled 129 cars, less than last year's 162 cars. Durum receipts totaled 33 cars, less than last year's 38 cars.