November 4, 2005


US Wheat Review on Thursday: Ends mostly up; kansas city board of trade, minneapolis grain exchange lead late rally



U.S. wheat futures settled mostly higher Thursday, driven by late gains in nearby higher-protein KCBT and MGE wheat amid oversold technical signs and on double-digit gains in Chicago Board of Trade soy futures, brokers said.


Global demand for higher-protein U.S. hard red winter and northern spring wheat has underpinned prices this year in relation to lower-protein U.S. soft red winter wheat.


CBOT December wheat futures settled Thursday up 1/4 cent at US$3.13 1/4, while CBOT March wheat ended up 1/4 cent at US$3.28 3/4.


The 9-day relative strength index for December ended at 26, still below the oversold benchmark of 30.


Commodity funds were net sellers, led by Fimat USA's sale of 2,500 December. Fimat also bought 1,000 December US$3.00 puts.


O'Connor and Co. sold 500 December, Tenco Inc. bought 500 December and ADM Investor Services bought 600 March, brokers said.


Spreading was active ahead of the Nov. 30 first notice day for deliveries against CBOT December, brokers said. Fimat spread 2,500 March/December while FCStonnee spread 800 December/March.


Cash spot U.S. SRW wheat basis bids were steady to firm Thursday, with a 7-cent gain in Cincinnati and a 10-cent gain in Louisville, Ky., cash sources said.


Spot midday CIF SRW wheat basis bids firmed 3 cents, they noted.


The U.S. Department of Agriculture reported U.S. wheat export sales for the week ended Oct. 27 totaled 433,900 metric tonnes, at the low end of analysts'estimates of 400,000 to 1.4 million metric tonnes.


Moreover, the sales did not include the rumored U.S. wheat sale to Iraq, which lately has been speculated to be about 700,000 to 800,000 tonnes.


In overnight U.S. wheat export news, Taiwan Flour Millers Association bought 92,250 metric tonnes of U.S. wheat, including 59,150 tonnes of dark northern spring, 25,450 metric tonnes of hard red winter wheat, and 7,650 tonnes of western white wheat.


South Korea bought 20,000 tonnes of U.S. wheat, including soft white, hard red winter and dark northern spring; and the USDA's CCC bought 4,130 tonnes of northern spring wheat for Nicaragua.


Traders continued to eye early wheat harvest reports and weather in Australian and Argentina, two key global wheat exporters.



Kansas City Board of Trade


KCBT December wheat ended up 2 cents at US$3.62 1/2, above its 100-day moving average of US$3.59 1/2 after setting a six-week low of US$3.56 1/2 amid sales of about 4,000 lots by speculative commodity funds. March closed up 2 cents at US$3.68.


The 9-day relative strength index for December ended at 37.


Man Financial sold 1,800 December and 500 March; ADM Investor Services sold 600 March and 100 July while buying 100 May; Fimat bought 350 March, 100 December and 100 July; Prudential Financial bought 200 December and 100 March; Refco Inc. sold 200 March 100, 100 May and bought 350 July; and UBS bought 200 December and 1,000 March and sold 300 May, brokers said.


In spread trade, Cargill Investor Services bought 800 December/March, brokers said.


Traders said that "bargain hunting" unfolded between US$3.57 and US$3.59 in the nearby December, with local traders then beginning to buy on a lack of additional fund sales at mid-session.


Cash spot U.S. HRW wheat basis bids were steady Thursday; while spot midday Gulf HRW basis bids sagged 3 cents, they noted.


Forecasts for mostly dry conditions across the U.S. hard red winter wheat belt through Monday were generally favorable as they followed recent crop-enhancing rains, forecasters said Thursday.


Moreover, light rains were possible early next week in the eastern part of the Southern Plains winter wheat belt, mostly in Oklahoma and northcentral Texas.



Minneapolis Grain Exchange


MGE December wheat settled up 6 cents at US$3.71 1/2 on late commercial buying and local short-covering, brokers said. March closed up 6 cents at US$3.77 1/2.


The 9-day relative strength index for MGE December ended at 47.


"There were light fund sales all day and then scale-down buying from commercials," one MGE wheat broker said. "There was zero selling late as we bounced, which caused locals to cover shorts into air. They still have short positions to cover."


ADM Investor Services was a late buyer of December wheat; Country Hedging bought 400 to 500 December during the session; and Fimat USA was a late bidder of 100 March in market-on-close orders, brokers said. Country Hedging was also a noted buyer, they said.


U.S. spring wheat export sales, both overnight and weekly, were also supportive, brokers said, noting good weekly sales of 68,500 metric tonnes to the Philippines and 36,900 metric tonnes to Japan.


Cash spot U.S. HRS wheat basis bids were mixed Thursday, cash sources said.