April 8, 2006


US Wheat Review on Friday: Mixed; new-crop kansas city board of trade firm



U.S. wheat futures settled mixed Friday, with new-crop Kansas City Board of Trade hard red winter wheat futures firming into the close on lingering U.S. HRW crop concerns after nearly day-long profit-taking losses, brokers said.


New-crop Minneapolis Grain Exchange spring wheat futures also found support from fears of U.S. spring planting delays amid high water in the Red River Valley.


Chicago Board of Trade soft red winter wheat futures remained in negative territory on light fund sales and bearish fundamentals, brokers noted.


Positioning was featured Friday ahead of Monday's U.S. Department of Agriculture 2005-06 wheat end-stocks data, with analysts expecting the government to reduce by just 8 million bushels its 2005-06 U.S. wheat end- stocks forecast to 534 million bushels.


The 2005-06 wheat marketing year ends May 31, leaving traders more focused on new-crop prospects than well-publicized old-crop fundamentals, many brokers have noted.


Friday also marked the first official day of the Goldman roll, the five sessions when Goldman Sachs rolls nearby futures of commodities included in the GSCI to a deferred month ahead of an upcoming futures delivery cycle to avoid any deliveries. First notice day for the three U.S. May wheat futures is April 28.


CBOT May closed down 1 1/4 cents at US$3.51 1/4, just above its 100-day moving average of US$3.49 and below its 200-day moving average of US$3.52 per bushel.


Speculative funds sold about 2,000 lots on the day after entering the session net long about 6,700 CBOT wheat futures, brokers said.


ABN Amro and Man Financial each sold 500 May; Fimat was a light net seller of about 100 May; JP Morgan bought 300 July and Prudential Financial bought 300 May, brokers said.


Spreading was heavy, with one CBOT wheat broker estimating about 7,000 May/July had been rolled Friday on the first day of the Goldman roll.


Midday spot U.S. HRW and SRW Gulf barge bids were unchanged Friday, cash sources said.


U.S. wheat export sales were quiet.


In global wheat news, questions surfaced in Australia about the future of a system that includes wheat exports of more than AUS$4 billion per year.


AWB Ltd. (AWB.AU), a monopoly that reportedly had notorious dealings with the former Iraqi regime of Saddam Hussein, has almost 18 million tonnes of wheat to export this year from production last crop year ended March 31.


A discussion paper released this week by grower lobby, Grains Council of Australia, points to the problems faced by the industry in finding agreement to change the system currently operated by AWB with veto power over export applications by others.



Kansas City Board of Trade


KCBT hard red winter wheat settled mixed, with new-crop KCBT wheat futures firm on fears of U.S. HRW crop damage amid warmer Southern Plains temperatures.


KCBT traders noted that overnight rains and forecasts for more rain Friday afternoon had eased some concerns but added the market's focus for the next month would be on daily weather forecasts into harvest.


KCBT May ended down 1 cent at US$4.30 per bushel. KCBT July closed up 1 cent at US$4.37, leaving intact a chart gap formed on Thursday's open after a rain system missed some of the most stressed fields amid warming temperatures.


Spot cash 11%, 13% and 14% U.S. hard red wheat basis bids were unchanged Friday, while bids for 12% HRW firmed 1 cent, according to the KCBT.



Minneapolis Grain Exchange


MGE May wheat settled down 1 cent at US$4.15 3/4 while July wheat ended up 1/4 cent at US$4.22 3/4 and new-crop September ended up 1 cent at US$4.27 per bushel.


"We were lower early on profit-taking after the run-up, but when KCBT came back late, it didn't take much to bring us back," one MGE broker said.


Spreading of buying new-crop MGE futures and selling of CBOT wheat futures was noted, but MGE May/July spreading was relatively muted, he added.


Cash U.S. spring wheat basis bids were mixed Friday, up 25 cents to down 10 cents per bushel, cash sources said. Minneapolis wheat receipts totaled 21 railcars Friday versus last year's 134 railcars. There were 75 durum receipts versus last year's 52 cars.