April 26, 2006


US Wheat Review on Tuesday: Mixed; supply worries boost kansas city board of trade , minneapolis grain exchange



U.S. wheat futures closed mixed Tuesday, with higher-protein Kansas City Board of Trade and Minneapolis Grain Exchange wheat futures gaining on Chicago Board of Trade soft red winter wheat on hard wheat supply fears, brokers said.


Recent missed rain chances in western Kansas hard red winter wheat fields and forecasts for freezing temperatures in that key area on Tuesday night, along with behind-normal U.S. spring wheat plantings prompted the ongoing concerns about U.S. hard wheat supplies, they noted.


"KCBT wheat is higher and CBOT is lower because they are two different animals," said Vic Lespinasse, a CBOT floor analyst for AG Edwards & Sons.


"There are concerns about the hard red winter wheat crop while soft red winter wheat conditions are good," Lespinasse added.


The U.S. Department of Agriculture said Monday that 34% of the U.S. winter wheat crop was in very poor to poor shape. Thirty percent of the Kansas' winter wheat crop was in good-to-excellent shape as of Sunday, compared with 38% last week; 31% of the state's crop was in very poor-to-poor shape versus last week's 23%, the USDA said.


Meanwhile, key U.S. Midwest soft red winter wheat ratings on Monday pointed to good production potential.


CBOT July wheat ended flat Tuesday at US$3.63 1/2 per bushel while May closed down 3/4 cent at US$3.50.


Speculative funds were about even on the day after entering the session net short about 11,000 CBOT wheat futures, brokers said.


CBOT wheat spread trade continued ahead of Friday's first notice day for deliveries against CBOT May wheat, brokers said.


ADM and Tenco Inc. each spread 600 May/July while Fimat and O'Connor and Co. each spread 600 July/May, they added.


The KCBT/CBOT July wheat spread settled Tuesday at 87 1/4 cents, premium KCBT, after closing Monday at 79 1/2 cents.


"A lot of traders think the KCBT/CBOT July wheat spread is going to US$1.00 (premium KCBT)," Edwards' Lespinasse said.


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


Brokers said Statistics Canada's report Tuesday of all-wheat plantings at 25.62 million acres, up from last year's 24.9 million acres, was mostly neutral for wheat. Pre-report estimates were 25.30 to 27.50 million acres.


In global wheat news, India's first wheat imports in more than six years arrived at Chennai port Tuesday, a senior official at the State Trade Corp. of India (512531.BY), or STC, said.


While India said last Friday that it would import 3 million tonnes of wheat during 2006, the U.S. wheat futures markets have mostly ignored the news. Brokers speculate most of the imports would be sourced from Australia, and they also noted that immediate purchases would come at a time of increased harvest-time supplies.


In CBOT exchange news, traders expected members of the board of directors of CBOT Holdings Inc. (BOT), the parent company of the Chicago Board of Trade, to vote Tuesday afternoon in a regular monthly meeting on a proposal to begin June 15 simultaneous electronic grain trade during open-outcry grain trading hours, otherwise referred to as "side-by-side" trade.


The 158-year-old exchange, which began as a grain-trading institution, already trades financial instruments electronically during open-outcry trading hours.



Kansas City Board of Trade


KCBT July hard red winter wheat settled up 7 3/4 cents at US$4.50 3/4 while KCBT May closed up 5 cents at US$4.42 1/2 per bushel.


The gains followed weak opening calls and highlighted the volatility of a weather market, brokers said.


Spot cash 11% through 14% U.S. hard red wheat basis bids were steady Tuesday, according to the KCBT.



Minneapolis Grain Exchange


MGE July wheat settled up 5 cents at US$4.29 1/4 and May wheat ended up 5 cents at US$4.19 3/4 per bushel.


Support stemmed from concerns that delayed U.S. spring wheat plantings would cut crop production this year, brokers noted.


Only 20% of the U.S. spring wheat crop had been planted as of Sunday due to excessive precipitation in the Northern Plains, well behind last year's 37% and the average of 27%, according to the USDA.


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


Tuesday's Minneapolis wheat receipts totaled 134 railcars versus last year's 155 railcars. There were 25 durum receipts versus last year's 27 cars.