May 11, 2006
US Wheat Review on Wednesday: Mixed; kansas city board of trade retreats before Friday's USDA data
U.S. wheat futures ended mixed Wednesday, pressured by losses in nearby Kansas City Board of Trade hard red winter wheat futures on a retreat from Tuesday's contract high amid signs of a seasonally toppy U.S. cash hard red winter wheat market and overbought futures conditions, brokers said.
Positioning ahead of Friday's U.S. Department of Agriculture 2006 U.S. wheat production and stocks data, light overnight rains in southwest Kansas and parts of Oklahoma, fading worries that temperatures will get cold enough to damage HRW wheat early Thursday, and a lack of wheat tender details from India and Jordan also weighed on the market, brokers said.
Early fund buying in Chicago Board of Trade wheat futures, amid an open interest record of 415,535 futures, faded after midday while traders noted ample U.S. soft red winter wheat supplies and lackluster export news.
CBOT July wheat settled down 1/4 cent at US$3.84 1/2 while May ended up 2 cents at US$3.77 1/2 per bushel.
Eight deliveries were posted Wednesday against CBOT May wheat futures with the last date available of May 3.
Wheat registrations late Monday at the CBOT totaled 1,675 lots, up three lots from the previous day.
Speculative funds were net buyers of about 3,000 contracts during the session, brokers said. Iowa Grain bought 2,000 July, Calyon Financial bought 1,400 July and Fimat sold a net 1,500 July, brokers said.
In CBOT wheat spread trade, Tenco Inc. spread 1,000 July 2007/March, FC Stonnee spread 500 July 2007/March and O'Connor and Co. spread 1,000 March/December, brokers said.
Midday spot U.S. HRW and SRW Gulf barge bids were flat Wednesday, cash sources said.
In global wheat news, European spot cash wheat prices firmed Wednesday as a large shipper bought new-crop positions; the euro strengthened against the dollar; and sellers became more keen to hold out in hopes of scoring higher prices from feed compounders, sources said.
French spot standard wheat, basis Rouen, was EUR0.50-EUR1 higher at EUR105-EUR106.00 a metric tonne. For new crop, September-December traded at EUR110-111/tonne, up EUR1 on the day.
Earlier Wednesday, Statistics Canada reported March 2006 Canadian wheat stocks totaled 18.8 million metric tonnes, within the range of analysts' estimates.
Traders expected the USDA to report early Thursday that weekly U.S. wheat export sales totaled 250,000 to 350,000 metric tonnes.
Positioning was also expected Thursday ahead of Friday's USDA 2006 U.S. wheat production and ending stocks reports.
Analysts on average expected the USDA to report Friday 2006 U.S. all-wheat production at 1.9575 billion bushels, down from the 2005 U.S. wheat production of 2.105 billion.
U.S. winter wheat production was seen at 1.3730 billion bushels, down from last year's 1.499 billion; hard red winter wheat production was seen at 745 million bushels, down from last year's 930 million; soft red winter wheat production was seen at 359 million, above last year's 309 million; and white wheat production was seen at 258 million bushels, down from last year's 260 million bushels.
Analysts expected the USDA to report 2005-06 U.S. wheat ending stocks totaled 535 million bushels, down from the previous year's 540 million. U.S. wheat ending stocks for 2006-07 were seen at 454 million bushels.
Kansas City Board of Trade
KCBT July hard red winter wheat settled Wednesday down 2 3/4 cents at US$4.65 1/4 while May ended down 8 3/4 cents at US$4.55 per bushel.
ADM bought about 600 July and 200 December, Man Financial bought 300 July, the Refco division of Man Financial sold 300 July and UBS sold 500 December and 100 July, brokers said.
There were 18 redeliveries against KCBT May wheat on Wednesday.
The 9-day Relative Strength Index for KCBT July wheat eased to 65 from Tuesday's reading of 69. A close at or above 70 is considered to be indicative of an overbought market, traders noted.
Spot cash 11% through 14% U.S. hard red wheat basis bids were unchanged Wednesday. But traders said at midday that bids had a steady-weak tonnee after Tuesday's heavy producer sales and a 3 1/2-year top in the Minneapolis Grain Exchange HRW index.
The MGE cash HRW wheat index reported an average of nearly US$4.30 3/4 per bushel, which represents a rise of about 53 cents since March 30, a gain of US$1.25 over the past year, and the single-highest cash price seen since Nov. 7, 2002.
However, wheat analysts warned that seasonal harvest pressure could begin to weigh on HRW cash markets.
"It is an aging bull market with harvest just around the corner," said Louise Gartner, an analyst with Spectrum Commodities, on Wednesday. "Seasonally, wheat has a tendency to peak in early May. In other words, I expect that we'll be topping this market soon."
Minneapolis Grain Exchange
MGE July wheat settled unchanged at US$4.43 1/2 while MGE May wheat also ended flat at US$4.43 1/2 per bushel.
There were 10 deliveries against MGE May wheat on Wednesday.
Cash spring wheat basis bids were steady Wednesday, cash sources said. Wednesday's Minneapolis wheat receipts totaled 89 railcars versus last year's 367 railcars. There were 5 durum receipts versus last year's 16 cars.