November 24, 2005


US Wheat Review on Wednesday: Ends mostly weak; kansas city board of trade, minneapolis grain exchange set 2-mo lows



U.S. wheat futures closed mostly lower Wednesday, pressured by speculative sales in Kansas City and Minneapolis wheat markets ahead of Thursday's Thanksgiving holiday and the Nov. 30 first notice day for deliveries against the U.S. Dec wheat futures, brokers said.


Speculative commodity funds remain net long KCBT and MGE, and short CBOT wheat futures, offering some support to the latter Wednesday. In fact, CBOT nearby contracts found technical support at Tuesday's contracts lows amid intermittent light short-covering.


The U.S. wheat futures markets will be closed on Thursday in observance of the Thanksgiving holiday, and will close at noon CST on Friday.


CBOT December wheat ended Wednesday steady at US$2.97 per bushel, while CBOT March also settled steady at US$3.12 3/4, above Tuesday's contract low of US$3.11.


Commodity funds were light net sellers, led by ABN and UBS' sales of 500 December, brokers said. Rand Financial bought 400 March while Refco Inc. spread 500 March/December.


Cash spot U.S. SRW wheat basis bids were steady to firm; spot midday Gulf SRW wheat basis bids were steady, grain merchandisers said.


Overnight U.S. wheat export sales were quiet, while analysts expected the U.S. Department of Agriculture to report Friday weekly U.S. wheat export sales totaled 300,000 to 500,000 metric tonnes, less than the previous week's 565,000 tonnes.


In global wheat news, the Canadian Wheat Board boosted initial wheat payments by CUS$11.50 to CUS$37.90 per metric tonne, depending on the grade and class. Durum initial payments were increased by CUS$5.00 to CUS$16.50 per tonne.


Initial payments are set in relation to world prices and represent a portion of the returns farmers can expect from the sale of their grain over the entire crop year, the CWB said.



Kansas City Board of Trade


KCBT December ended Wednesday down 4 cents at US$3.47 1/2 after setting a new two-month low of US$3.45; and March closed down 3 1/4 cents at US$3.52 1/2.


The KCBT/CBOT March wheat spread ended at 39 3/4 cents, premium KCBT, after ending Tuesday at 43 cents, premium KCBT. The spread hit a high Nov. 10 of 49 3/4 cents as global demand for higher-protein U.S. wheat outpaces that for U.S. SRW wheat.


The last trading day for KCBT Dec wheat options is Friday.


Cash spot U.S. HRW cash basis bids were steady to mixed Wednesday, with a 3-cent loss in Portland, Ore.; spot midday U.S. Gulf HRW basis bids were also steady, cash sources said.


Weather forecasts at midday Wednesday suggested a weekend winter storm might shift slightly northward, missing some of the driest hard red winter wheat fields in Texas and Oklahoma, and that a similar storm might develop during the middle of next week.


Outlooks called for 0.25 to 0.75 inch of precipitation across the northern and eastern portion U.S. HRW belt during Sunday, with maybe 0.10 to 0.30 inch across the southwestern areas, according to Meteorlogix weather service.


The USDA reported Monday that the U.S. winter wheat crop was 55% in good to excellent condition, down 1 percentage point from the previous week.


The percentage of Oklahoma's winter wheat crop rated in poor to very poor condition during the past weeks has climbed from 9% to 15%. Texas wheat fields were 37% in poor to very poor shape, up from 26% in the past weeks.


Still, wheat traders have noted that improved spring weather can revive a needy wheat crop.



Minneapolis Grain Exchange


MGE December ended Wednesday down 1/2 cent at US$3.62; and MGE March closed down 1 3/4 cents at US$3.64 3/4 after setting a two-month low of US$3.62 1/2.


Losses in KCBT sparked sales in MGE, while cash spring wheat basis bids were steady to weak following recent farmer sales, brokers said.