October 27, 2005


US Wheat Review on Wednesday: Ends mixed; iraq buy boosts kansas city board of trade, minneapolis grain exchange



U.S. wheat futures settled mixed Wednesday, with higher-protein Kansas City Board of Trade and Minneapolis Grain Exchange wheat up on much-anticipated news reports that Iraq bought 1 million metric tonnes of U.S. wheat, brokers said.


"It's old news," said Bill Nelson, a grain analyst at AG Edwards & Sons. "It's bullish news, but I think it's well in the markets. The (KCBT/CBOT) December spread is out 50 cents. Long term, if we continue to see this buying interest show up for the hard wheat, perhaps it's legs under those more distant (deferred July) spreads.


"For the nearby, I'm hesitant to think it has much more impact than the passing of the day," he added. "It's been a big story."


Meanwhile, Chicago Board of Trade soft red winter wheat futures ended lower on signs of good global wheat export competition, including a forecast for a bumper Australian crop of 23-25 million tonnes from monopoly exporter AWB Ltd. (AWB.AU), and losses in CBOT soybeans, brokers said.


CBOT December soft red winter wheat closed down 2 cents at US$3.23 1/2, above this week's low US$3.22 1/4. CBOT March wheat ended down 1 1/2 cents at US$3.38 3/4.


Commodity funds and commercials were light net buyers, led buy R.J. O' Brien's purchase of 500 December. Cargill Inc. bought 200 March and Produce Grain bought 200 December, they noted.


Calyon Financial was a late seller of at least 700 December after buying 400 December early. Man Financial sold 400 December and O'Connor and Co. sold December, brokers said.


Spot U.S. soft red winter wheat cash basis bids were steady to firm Wednesday, with a 9-cent gain in Louisville; while spot midday CIF basis bids were unchanged, cash sources said.


In other global wheat news, Egypt bought 33,000 tonnes of Russian wheat, while Russia bought 44,770 tonnes of domestic million wheat at its intervention trading session.


Total Russian intervention purchases to date totaled 946,490 tonnes; Russia has set aside RU6 billion for intervention purchases of grain harvested this year.


U.K. wheat ending stocks for 2005-06 are estimated at 2.058 million metric tonnes, up 2% on the year, but in line with the five-year average, according to official Department for Environment Food and Rural Affairs supply/demand figures released Wednesday.


Pakistan said it hoped to grow 22 million metric tonnes of wheat this year and would increase the wheat support price for farmers to PKR415 per 40 kilograms from PKR400 per 40 kg last year to encourage production.


However, Ukraine said it was likely to grow only 9 million tonnes of winter wheat in 2006, down from the 2005 harvest of 17.54 million tonnes, due to dry planting conditions.



Kansas City Board of Trade


KCBT December wheat ended Wednesday up 2 1/2 cents at US$3.72 3/4 and March closed up 1 cent at US$3.77 3/4.


Early options trade sparked local buying of December futures, KCBT brokers said.


FC Stone sold 400 December US$3.70 puts and Prudential Financial sold about 350 December US$3.40 puts, they noted.


In outright trade, ADM Investor Services sold 800 December and bought 200 July, Frontier bought 150 December, Cargill Inc. bought 500 December and sold 150 March and 300 July, Fimat bought 100 march and sold 400 December and 50 July, Man Financial sold 350 December and 100 July while buying 150 March, Prudential bought 500 December and sold 100 March, Refco Inc. bought 50 December, 180 March and 200 July and UBS bought 250 December and 50 March, brokers said.


Cash spot U.S. HRW wheat basis bids were mostly steady Wednesday; while spot midday CIF basis bids were unchanged, they noted.


Traders also eyed forecasts for mostly dry weather next week across the U.S. Plains hard red winter wheat belt. The U.S. Department of Agriculture reported Monday that the U.S. winter wheat crop was 57% good to excellent compared with 76% last year.



Minneapolis Grain Exchange


MGE December wheat settled Wednesday up 4 3/4 cents at US$3.74 after setting Monday a one-month low of US$3.65, and March closed up 4 1/2 cents at US$3.80 1/2.


UBS bought about 700 December and 200 March, while Country Hedging, ADM Investor Services and Fimat were noted sellers, brokers said.


"Cash prices have firmed a bit today, after firming yesterday, but it may not mean much because cash trade is so light," one broker said. "Farmers are more intent on getting the (field) crops out of the field."