June 29, 2004

 

 

US Wheat Review On Monday: Sags On Spillover Pressure, Egypt Cancellation

 

U.S. wheat futures sank Monday amid spillover pressure from large losses in fellow corn and soybean futures. Early pressure also stemmed from Egypt's decision to cancel a wheat tender.

 

Chicago Board of Trade Sep wheat fell to an early low of $3.45 1/2 per bushel, which is a new eight-month low. Still, CBOT Sep wheat continued to hold support at that level even though nearby CBOT soybean contracts fell limit down in midday trade.

 

CBOT Sep wheat ended 2 cents lower at $3.48, while Kansas City Board of Trade Sep wheat slipped 3 1/4c to settle at $3.70 and Minneapolis Grain Exchange Sep wheat finished 1 1/4c lower at $3.97 1/2.

 

While CBOT Sep wheat fell nearly 0.6% on the day, the most active CBOT Dec corn contract tumbled 2.3% and CBOT Nov soybeans dropped nearly 3.0%.

 

After giving up considerable ground in the CBOT wheat/corn spread last week, CBOT Dec wheat gained back 4c on CBOT Dec corn Monday.

 

Coming into the market early Monday, traders were digesting news that Egypt's main state buyer, the General Authority for Supply Commodities, once again cancelled a tender to buy wheat citing that prices were too high. Egypt is traditionally the largest buyer of U.S. wheat, but last week filled a tender with two cargoes of French grain. Recently GASC has shown a habit of issuing tenders and then canceling them if they are unsatisfied with the prices offered.

 

Weekly export inspection data demonstrated further evidence of the current lackluster demand situation. Shipments inspected for export for the week ending June 24, totaled 14.6 million bushels, which is down from 16.4 million in the previous week, but up from 11.6 million one year ago.

 

Still offering some support, Jordan issued a tender to buy 100,000 tons of hard wheat. Earlier this month, Jordan filled a similar tender with U.S. grain.

 

In news from Argentina, data from both the Agriculture Secretariat and Buenos Aires Cereals Exchange suggests that wheat plantings are halfway done, which is in line with last season.

 

Traders continue to await Wednesday's busy schedule, when the USDA is expected to issue both the June acreage and quarterly stocks reports. Wednesday also marks first notice day against the Jly contract and the end of the month.

 

CHICAGO BOARD OF TRADE

 

CBOT Sep wheat edged below Friday's low of $3.46 to trade at $3.45 1/2 early Monday. Sep later tested the $3.45 1/2 level multiple times early Monday, but failed to violate that level.

 

Funds were light net sellers of about 1,000 lots.

 

O'Connor sold 500 Dec, while Rand Financial sold 300 Sep and 100 Dec. Prudential Securities also sold 300 Sep.

 

Fimat bought 300 Sep and Cargill/Cargill Investor Services bought 300 Dec.

 

ADM Investor Services spread 500 Sep/Dec.

 

Fimat bought 500 Sep $3.50 puts.

 

KANSAS CITY BOARD OF TRADE

 

KCBT Sep wheat yet again fell to a new low for the year, dropping to $3.68 1/2 Monday.

 

As the Kansas winter wheat harvest begins to wind down in many areas, end users will be trying to get a better handle on the overall quality of the crop. Due to excess rain late season, some sprouting problems have been reported out of western and eastern Kansas, especially for the white winter wheat crop in the west.

 

On Monday, Man Financial sold a net 600 Sep and 100 Dec. FC Stone sold 100 Jly and 200 Sep. Frontier Futures sold 150 Jly. Prudential Securities sold a net 250 Jly, but was also a small net buyer of the Dec.

 

Shay Grain and Cargill Investor Services each bought a net 300 Sep.

 

ADM Investor Services spread 700 Jly/Sep.

 

MINNEAPOLIS GRAIN EXCHANGE

 

MGE Sep fell to $3.95 1/4 Monday, which is its lowest point traded since February 19.

 

The MGE/KCBT Sep wheat spread widened out to settle at 27 1/2c, premium the MGE, which is its widest settlement since mid-March.

 

Spring wheat conditions came in at 68% good to excellent late Monday, which are up 4 percentage points on the week.