November 21, 2005

  

US Wheat Outlook on Monday: Flat-Weak on e-CBOT, US wheat exports

  

 

U.S. wheat futures were called to open flat to slightly lower Monday following weak overnight trade and on quiet U.S. wheat export sales, brokers said.

 

In the overnight e-CBOT session, December wheat at the Chicago Board of Trade closed down 1/4 cent at US$3.01 3/4 and March settled down 1/4 cent at US$3.17 1/2.

 

Weekend U.S. wheat export sales were quiet, while the dollar edged lower Monday, a supportive element for U.S. grain export sales, brokers said.

 

Meanwhile, traders noted news wire reports indicating India, a wheat exporter for the past six years, was not likely to import wheat due to ample stocks through April and outlooks for a good wheat harvest after good monsoon rains in September.

 

CBOT traders have been hoping that India, the second largest global wheat grower, will import grain this year. In other news, the Indian government said wheat sowing in the Nov. 1-21 period covered 5.1 million hectares versus 4.5 million hectares in the same period last year.

 

Moreover, Iraq's trade minister said Australian wheat imports would continue, quelling Australian fears of slowdown amid political turmoil following a recent United Nations report.

 

A report issued Oct. 27 on the U.N. oil-for-food program by Paul A. Volcker, a former chairman of the U.S. Federal Reserve Board, found Australia's monopoly wheat exporter AWB Ltd. (AWB.AU) paid USUS$221.7 million to Jordanian-based Alia Transportation for transporting wheat through Iraq, but the funds were channeled to the regime of Saddam Hussein.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Monday, with a 7-cent gains in Manhattan, Kan. and Enid, Okla. Spot basis bids; soft red winter wheat basis bids were mixed, with a 5-cent gain in Chicago and a 2-cent loss in Memphis, Tenn.; and spring wheat basis bids were steady to weak, with a 15-cent loss in the Minneapolis rail bid, grain merchandisers said.

 

In other global wheat news, AWB Monday lowered its estimate of returns from sales of its benchmark wheat type grown this crop year ending March 31, 2006 by US$2 per metric tonne.

 

AWB estimates its benchmark new crop Australian Premium White type wheat of 10% protein will return a gross AUS$191 a metric tonne, free on board, down AUS$2 from the company's previous review a week ago.

 

Wheat prices in major producing regions in China were mostly steady in the week ended Monday on slow flour mill buying amid only average flour demand, sources said.

 

China was a key buyer of U.S. soft red winter wheat last year but has been absent this year, pressuring U.S. SRW prices.

 

Kazakhstan said Monday it planned to cut the country's wheat-planted area by some 2.4 million hectares in the 2005-2006 season, from 12.4 million hectares the previous season, to avoid overproduction of low-quality wheat.

 

Overproduction of low-quality wheat, which met with low demand both domestically and internationally, boosted stocks and depressed domestic prices, the government said.

 

The CFTC reported late Friday that speculators for CBOT wheat futures only boosted their net short for the week ended November 15. They increased short holdings by 5,989 lots to hold 102,452 short positions and increased their long holdings by 1,569 lots to hold 51,953 long positions.

 

For CBOT wheat futures and options combined, speculators were short 103,232 lots, up 7,059 contracts from the week before, and long 49,571 contracts, up 195 lots from the previous week.

 

For KCBT wheat futures only, speculators for the week ended November 15 cut their net long stance. They decreased their long holdings by 1,569 lots to hold 47,740 long positions and decreased their short holdings by 755 lots to hold 5,335 short positions.

 

For KCBT wheat futures and options combined, speculators were long 46,201 lots, down 2,043 contracts, and short 3,749 contracts, down 866 lots from the previous week.

 

For MGE spring wheat futures only, speculators for the week ended Nov. 15 remained heavily net long, increasing long holdings by 800 lots to 9,735 lots and increasing short holdings by 1 lot to 84 lots.

 

For MGE spring wheat futures and options combined, speculators also remained heavily net long, increasing long holdings by 765 lots to 9,636 contracts and boosting short holdings by 79 lots to 150 contracts.