November 11, 2005

 

US Wheat Review on Thursday: Ends lower; CBOT corn, soy losses noted

 

 

U.S. wheat futures settled mostly lower Thursday on speculative sales and following contract lows in Chicago Board of Trade soy and corn futures amid bearish U.S. Department of Agriculture 2005 U.S. supply and demand data, brokers said.

 

Commodity fund sales of about 5,000 CBOT wheat futures and lingering index fund rolling of positions also pressured CBOT wheat while strong weekly U.S. export sales totaling 1.397 million metric tonnes, including 800,000 metric tonnes of HRW wheat to Iraq, limited losses in higher protein KCBT and MGE wheat, they noted.

 

In fact, U.S. wheat export sales for the week ended Nov. 3 of 1.397 million metric tonnes were a marketing-year high and 3.6 times the prior four-week average, the USDA said.

 

CBOT December wheat futures settled Thursday down 5 1/4 cents at US$3.09 3/4, just above this week's contract low of US$3.08 3/4; and CBOT March wheat ended down 5 1/4 cents at US$3.26.

 

Calyon Financial, Fimat USA and Refco Inc. were noted sellers of December, while Refco Inc. also sold 2,000 March and 1,000 July, brokers said.

 

In spread trade, Man Financial spread 1,000 December/March while Tenco Inc. and Cargill Inc. spread March/December, they noted.

 

Cash spot U.S. SRW wheat basis bids were mostly steady Thursday, while spot midday Gulf SRW wheat basis bids were also steady, they noted.

 

Thursday's monthly USDA wheat supply data were mostly neutral for U.S. wheat futures, futures brokers said.

 

The USDA forecast 2005-06 U.S. wheat ending stocks at 530 million bushels, just below analysts' average estimate of 533 million bushels.

 

The government boosted its 2005 U.S. SRW wheat carryout estimate by 5 million bushels to 90 million, boosted its U.S. 2005 durum ending stocks estimate by 5 million bushels to 58 million, and cut its 2005 U.S. HRW wheat ending stocks estimate by 10 million to 175 million bushels.

 

World wheat ending stocks for 2005-06 were seen at 139.5 million metric tonnes, above the October estimate of 137.4 million but below last year's estimated 149.18 million tonnes.

 

In overnight wheat export news, Japan bought 86,000 tonnes of U.S. wheat in an overall tender for 142,000 tonnes; the USDA's CCC bought 12,000 tonnes of northern spring wheat for Lebanon; and Jordan postponed its tender for 100,000 tonnes following Wednesday's bombings.

 

In global wheat news, the European Union's grain management committee granted Thursday export licenses for 208,000 metric tonnes of subsidized free-market wheat at a maximum refund of EUR5.00/tonne, less aggressive than the previous week's 435,000 tonnes of wheat licenses granted at EUR7.49/tonne, brokers said.

 

In other global wheat news, a spokesman for consultancy Australian Wheat Forecasters Pty. Ltd. forecast Australia's crop at 24.5 million metric tonnes, toward the upper end of a 23 million to 25 million estimated range favored by wheat exporter AWB Ltd. (AWB.AU) and Commonwealth Bank of Australia.

 

Strategie Grains, a monthly publication, said the differential between E.U and Black Sea wheat prices continues to narrow, with E.U wheat gaining competitiveness.

 

 

Kansas City Board of Trade

 

KCBT December wheat ended Thursday down 3/4 cent at US$3.70; and March closed up 3/4 cent at US$3.75 3/4.

 

The KCBT/CBOT December wheat spread rose to a new high for the move on the bullish USDA crop data and strong export sales, but late fund sales allowed the spread to close at 60 1/4, still a new high close.

 

Still, traders noted hopes for additional Iraqi purchases of U.S. HRW wheat near-term and speculation about possible Indian purchases of Australian wheat in the next months underpinned nearby higher protein KCBT wheat.

 

ADM Investor Services sold 500 March and bought 300 December; Cargill Investor Services sold 450 March and bought 300 July; FC Stone bought 200 December; Fimat USA sold 300 December and 150 July; Man Financial traded 300 December and bought 300 March; and Prudential Financial sold 800 December and bought 200 March, brokers said.

 

In spread trade, Man Financial bought 600 December/March while Fimat sold 400 March/December; FC Stone spread 1,000 March/July; and Fimat sold 350 July/December, brokers said.

 

Cash spot U.S. HRW cash basis bids were steady to narrowly mixed Thursday, while spot midday Gulf HRW wheat basis bids surged 8 cents per bushel, pointing to possible fresh HRW export business, sources said.

 

Forecasts for dry weather through the end of next, not a welcome outlook for dry U.S. HRW wheat growing areas such as Texas, they noted.

 

 

Minneapolis Grain Exchange

 

MGE December spring wheat settled Thursday down 3/4 cent at US$3.75 1/4; and March closed down 2 1/4 cents at US$3.80.

 

ADM Investor Services was an early seller of March, brokers said.

 

Cash spot U.S. spring wheat basis bids were mostly steady to weak Thursday, with a 5-cent drop in Minneapolis rail bids, grain merchandisers said.

 

Reports Wednesday that Canada will again have a large amount of lower- quality wheat to export during the 2005-06 crop year were anticipated, brokers said.

 

"We are looking at just over 40% of the wheat produced in Western Canada in 2005-06 as grading as No. 1 and No. 2 Canada Western Red Spring, while at least 35% of the wheat will grade as No.3 CWRS," Maureen Fitzhenry, Manager of Media Relations for the Canadian Wheat Board (CWB) said.

 

She noted that the remaining percentage will be made up of No.4 CWRS and feed quality wheat.