November 15, 2005


US Wheat Review on Monday: Ends mostly lower; fund sales hit kansas city board of trade



U.S. wheat futures settled mostly lower Monday, led by catch-up technical fund sales in Kansas City Board of Trade hard red winter wheat futures, brokers say.


"The Chicago (wheat) market was the first to break - it took the heaviest losses last week and was pretty much oversold coming into today's session, while Kansas City and Minneapolis were technically weak," said Shawn McCambridge, a grain analyst at Prudential Financial.


"That's being reflected in today's activity," he added. "Spreads narrowing in don't ... really reflect the true fundamentals that are out there - so I feel today's moves in each of these markets just reflect technical signals that are out there."


Higher-protein KCBT and MGE wheat futures have traded at a premium to lower-protein Chicago Board of Trade soft red winter wheat futures since this summer on good global demand for the former and lackluster export demand for the latter, analysts have noted.


Weekend U.S. wheat export sales were quiet, while the U.S. Department of Agriculture reported Monday weekly U.S. wheat export inspections totaled 15.121 million bushels, below analysts' expectations of 19-24 million.


Moreover, there were no wheat inspections for Iraq following last week's hopes for near-term sales, brokers said.


CBOT December wheat futures settled Monday up 1/4 cent at US$3.11 3/4 and CBOT March wheat ended down 1/4 cent at US$3.28.


Commodity funds were light net buyers of CBOT wheat, led by Iowa Grains' purchase of 400 December. In spread trade ahead of the Nov. 30 first notice day for deliveries against nearby December, ABN spread 1,000 March/December, brokers said.


Cash spot U.S. SRW wheat basis bids were steady to weak Monday, with a 5-cent loss in the spot Kansas City SRW truck bid; while spot midday Gulf SRW wheat basis bids were steady, they noted.


In other wheat export news, Jordan said it would tender Thursday for 100,000 metric tonnes of optional-origin wheat.


In global wheat news, the Buenos Aires Cereals Exchange forecast Argentina farmers this year would harvest 11.6 million metric tonnes of wheat, down 29% from last year's record 16.345 million tonnes. Argentina is a key global wheat exporter.



Kansas City Board of Trade


KCBT December wheat ended down 6 1/2 cents at US$3.64 1/2; and March closed down 6 1/4 cents at US$3.68 3/4.


ADM Investor Services sold 400 March, Cargill Investor Services bought 750 December, Man Financial bought 100 December and 100 May and Refco Inc. sold 200 March, brokers said.


In spread trade, Fimat spread 250 December/March and 350 March/July, Cargill Investor Services spread 750 March/December, Term Commodities spread 500 March/July, and General Mills and FC Stone each spread 500 July/March, they noted.


Cash spot U.S. HRW cash basis bids were steady to firm Monday, with a 4-cent gain in Hutchinson, Kan.; while spot midday U.S. Gulf HRW basis bids fell 2 cents, cash sources said.


The U.S. Department of Agriculture will release its weekly crop condition report late Monday.


Last week the government said the U.S. winter wheat crop was 57% in good to excellent condition, down from the previous week's 61% in that shape. Some traders expected continued deterioration in the HRW crop.


Moreover, forecasts for cold, dry conditions across the U.S. Southern Plains pointed to possible deterioration in the crop's condition, private forecasters said. Many Oklahoma and Texas wheat fields need additional moisture.


The six- to 10-day forecast for the U.S. Southern Plains hard red winter wheat belt called for above-normal temperatures and below-normal rainfall, according to Meteorlogix weather service on Monday.



Minneapolis Grain Exchange


MGE December spring wheat settled Monday down 1 cent at US$3.75 and March closed down 2 3/4 cents at US$3.79 1/2.


Cash spot U.S. spring wheat basis bids were steady to mixed Monday, with a 5-cent gain in the spot Minneapolis rail bid and a 3-cent loss in Portland, Ore., cash sources said.