February 22, 2006

 

US Wheat Review on Tuesday: Higher on weather, funds, exports

 

 

U.S. wheat futures settled higher Tuesday as weather-related concerns, fund buying and reports that Iraq had purchased wheat all helped provide support, sources said.

 

New contract highs were set in deferred CBOT, KCBT and MGE wheat futures for the second straight session.

 

Trend following funds continue to buy wheat and that helped support wheat futures, a commission house analyst said. Trading activity was choppy, however, with double digit losses in soybeans helping to keep a lid on the market, he added. May soybeans fell 13 cents to US$6.01 per bushel.

 

Frigid temperatures blanketed parts of the U.S. hard red winter wheat belt during the weekend, with concerns that the cold weather could damage the crop. The extremely dry conditions the crop has experienced so far this winter has left much of the hard red wheat crop without much snow cover, making it vulnerable to winterkill, sources said.

 

The coldest temperatures in the U.S. HRW wheat belt were Saturday morning in northern Colorado and southeast Nebraska where it was minus 5-15 degrees Fahrenheit, said Joel Burgio, a meteorologist with DTN Weather.

 

There is little snow cover to protect the crop, so chances are we might see some losses in those areas, Burgio said.

 

KCBT wheat is leading the market higher on speculation that some of the HRW crop might have been damaged, and speculation is bullish, a CBOT floor analyst said.

 

Reports that Iraq had purchased U.S., Canadian and European wheat in its long running tender for wheat also supported prices, floor sources said.

 

CBOT March wheat settled 4 1/2 cents higher at US$3.72 1/2 per bushel. May wheat also gained 4 1/2 cents to US$3.84.

 

New contract highs were set in May through December.

 

In CBOT trades, Calyon bought 1,500 May, Fimat bought 500 May and 500 July, Man Financial bought 500 May, Prudential bought 1,100 May and Rand Financial bought 300 May.

 

Fimat sold 1,000 May, Cargill sold 300 May, ABN Amro sold 500 May and Citigroup sold 300 May.

 

Commodity find buying was estimated at 4,000 contracts.

 

 

Kansas City Board of Trade

 

KCBT March settled 4 3/4 cents to US$4.40, May gained 6 1/2 cents to US$4.46, and July settled 6 cents higher to US$4.43.

 

Concerns over the impact the frigid weather over the weekend had on the hard red wheat crop helped push futures higher, sources said.

 

The same factors continue to provide support to the market, a KCBT trader said. It remains the weather, as there appears to be no appreciable moisture in the forecast, a floor trader said.

 

In addition, the funds were rolling out of their March contracts into May and July, the trader added.

 

Reports that Iraq had purchased U.S., EU and Canadian wheat also provided some support, sources said.

 

ADM bought 800 July and sold 800 July, ABN Amro bought 500 May, Man Financial bought 500 May and sold 500 March, and Prudential Financial bought 600 may and sold 800 July.

 

 

Minneapolis Grain Exchange

 

MGE March slipped 3/4 cent to US$4.15 1/4, and May rose 1 1/2 cents to US$4.23 1/2.

 

New contract highs were set from nearby March through December 2006 contracts.

 

MGE wheat remained in its recent role of a follower, a commission house analyst said.