January 18, 2006

 

US Wheat Review on Tuesday: Weak on technical sales, US wheat exports

 

 

U.S. wheat futures ended lower Tuesday on technical sales and disappointing U.S. wheat export news, brokers said.

 

Bellwether Chicago Board of Trade and Kansas City Board of Trade March wheat futures settled below their respective 10- and 20-day moving averages in a setback from last week's gains.

 

Pressure also stemmed from a lack of weekend U.S. wheat sales to Egypt and weekly U.S. wheat export inspections of 11.764 million bushels, below analysts' estimates of 15 million to 20 million and below last week's 22.629 million bushels, the wheat futures brokers noted.

 

The three U.S. wheat futures exchanges were closed Monday for Martin Luther King, Jr. Day.

 

CBOT March wheat ended Tuesday down 6 cents at US$3.28 3/4, while May ended down 6 1/2 cents at US$3.38 3/4 per bushel.

 

Commodity funds sold about 3,200 lots, brokers said. Citigroup and Calyon Financial each sold about 1,200 March and Fimat sold 1,000 March, while Cargill Inc., Merrill Lynch and UBS each bought 500 March.

 

Midday Gulf spot cash soft red winter wheat basis bids fell 2 cents Tuesday while cash interior basis bids were mixed, cash sources said.

 

In global wheat news, Russia's winter grain crops might be damaged by very low temperatures, news agency Prime Tass reported Tuesday, citing an official with the country's weather center.

 

Night temperatures in many regions are minus 30-36 degrees Centigrade and are as low as minus 45 degrees Centigrade in the Volga Federal District and the central European part of Russia, while many fields lack sufficient snow cover, the weather center said.

 

Moreover, Ukraine's minister of agriculture said Ukraine will export a maximum of 2 million metric tonnes of grain for the rest of this season, compared with the total of 10 million tonnes exported so far from the 2005-06 harvest.

 

A dry autumn caused a large drop in Ukrainian winter wheat plantings. The Ukrainian Agricultural Ministry recently forecast the upcoming winter wheat crop at 10.0 million tonnes, down from the previous harvest of 19.2 million tonnes.

 

Australian agribusiness AWB Ltd. (AWB.AU) said it was comfortable with its forecast range for production from the new wheat crop of 23 million metric tonnes to 25 million tonnes with the harvest about 95% complete.

 

The managing director of AWB told a government inquiry Tuesday he was unaware his company had paid kickbacks to Saddam Hussein's regime under the U.N.'s oil-for-food program, despite the tabling of AWB documents hinting at irregular payments as far back as November 2000.

 

Also in the Southern Hemisphere, Argentina's farmers had harvested 90% of the 2005-06 wheat crop by Saturday, the Buenos Aires Cereals Exchange reported.

 

As of Jan. 13, Argentina had sold 4.085 million metric tonnes of 2005-06 wheat, less than last year's 4.28 million tonnes, the Agriculture Secretariat reported Monday.

 

Finally, India's wheat plantings covered 25.7 million hectares in the Nov. 1-Jan. 16 period, compared with 25.2 million hectares in the year-earlier period, the Ministry of Agriculture said Monday.

 

While planted acreage is up, scientists have expressed concern over a recent rise in temperatures, which if prolonged, can adversely affect the crop. Rains across northern India have also been limited, they noted.

 

A healthy wheat crop is crucial this year, as market supplies are tight and the possibility of imports in the near term will hinge on sowing and production prospects in the current crop year to June, sources said. Scientists forecast an Indian wheat crop of 74 million-76 million tonnes in the current crop year to June, above recent years but still below the 1999-2000 record of 76.4 million tonnes.

 

 

Kansas City Board of Trade

 

KCBT March wheat settled Tuesday down 8 cents at US$3.75 1/4 per bushel, while May ended down 7 1/2 cents at US$3.77.

 

Man Financial sold about 1,900 March and bought 100 May; ABN Amro bought 450 March and sold 300 July; Frontier Futures bought 200 July, sold 250 September and sold 100 December; and FC Stonnee sold 150 March, brokers said.

 

The KCBT March/CBOT March wheat spread settled at 46 1/2, premium KCBT, after settling Friday at 48 1/2 cents, premium KCBT.

 

Deferred KCBT new-crop futures found slight support from U.S. HRW wheat crop concerns amid a lingering severe drought in the U.S. Southern Plains.

 

Kansas City cash bids were steady to weak while midday HRW Gulf spot basis bids slid 4 cents per bushel, cash sources said.

 

 

Minneapolis Grain Exchange

 

MGE March closed Tuesday down 6 cents at US$3.86 and May wheat settled down 6 1/2 cents at US$3.86 1/2 per bushel.

 

Cash U.S. spring wheat basis bids were steady to 5 cents per bushel lower Tuesday, cash sources said.

 

Minneapolis rail receipts of wheat on Tuesday totaled 58 cars versus last year's 187 cars. Durum receipts totaled 16 cars versus last year's 30 cars.