May 31, 2006

 

US Wheat Review on Tuesday: Ends mostly weaker on speculative sales

 

 

U.S. wheat futures ended mostly weaker Tuesday after late speculative and technical sales followed early quarter-end positioning and early talk of more possible heat losses to the U.S. hard red winter wheat crop, brokers said.

 

Some wheat futures traders noted talk that more rain had been added to this week's U.S. Plains weather forecasts, but other traders said the deleterious effect of extremely hot temperatures would offset any positive benefits from additional rains.

 

"It's getting too late for rain to significantly alter the wheat prospects," added Joel Burgio, of DTN Weather.

 

Meanwhile, the early U.S. hard red winter wheat harvest picked up steam in Texas and Oklahoma over the long holiday weekend, and Kansas wheat groups said last week that they would probably begin issuing wheat harvest reports at the end of this week.

 

While harvest pressure is typical at this time of the year as the U.S. hard red and soft red winter wheat harvests pick up, many traders said they expected the losses to remain limited amid concerns about tight U.S. hard wheat supplies.

 

Talk of crop-damaging droughts in Spain, China and Australia's New South Wales, and strength in gold and silver futures, also limited Tuesday's U.S. wheat futures' losses, brokers said.

 

CBOT July wheat ended down 3 1/2 cents at US$4.12 per bushel after falling through its key 10-day moving average of US$4.15 1/2.

 

Speculative funds sold 2,100 contracts after buying about 3,000 lots by 1:30 p.m. EDT, brokers said.

 

Unwinding of long CBOT/short KCBT wheat spreads also weighed on CBOT wheat on Tuesday, one broker said.

 

Midday spot U.S. HRW Gulf barge bids were flat Tuesday while spot SRW barge bids fell 3 cents, cash sources said.

 

In U.S. wheat export news, Morocco bought 40,000 tonnes of U.S. wheat.

 

In global wheat news, European cash wheat prices were mostly steady Tuesday as buyers await the early June release of European Union intervention stocks and sellers focused on tight global and U.S. supplies.

 

 

Kansas City Board of Trade

 

KCBT July wheat ended down 4 cents at US$5.02 after falling through the 10-day moving average of US$5.04.

 

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

 

Benson Quinn sold a net 700 July while ABN Amro bought 300 July and 200 December, brokers said.

 

In spread trade, ABN spread 200 July/September at 7 cents while Fimat spread 200 September/July at 6 3/4 cents to 7 cents per bushel, they added.

 

 

Minneapolis Grain Exchange

 

MGE July closed up 3/4 cent at US$4.70 3/4, just below its 10-day moving average of US$4.71.

 

Cash spring wheat basis bids were steady to firm Tuesday, cash sources said.

 

Tuesday's Minneapolis wheat receipts totaled 38 railcars versus last year's 69 railcars. There were three durum receipts.