December 1, 2005

 

US Wheat Review on Wednesday: Ends mostly up on late month-end rally

 

 

U.S. wheat futures closed mostly higher Wednesday on late month-end speculative buying after dragging much of the session on fund-led losses in Chicago Board of Trade wheat and heavy first notice day deliveries against CBOT December wheat, brokers said.

 

The late rally in bellwether CBOT wheat began after 1:00 p.m. CST, as ABN Amro bought at least 800 March, boosting the most active contract into buy stops at US$3.18 per bushel, site of trendline resistance, traders said said.

 

Funds hold a near-record short CBOT wheat position and are long KCBT, MGE wheat futures, reflecting good global demand for higher-protein U.S. wheat and lagging demand for lower-protein U.S. SRW wheat.

 

The popular KCBT/CBOT March wheat spread ended at 49 3/4 cents per bushel, premium KCBT, after ending Tuesday at 46 3/4 cents, premium KCBT.

 

On continuous charts, the KCBT/CBOT spread set a new high Wednesday of 65 cents, premium KCBT.

 

CBOT December wheat ended Wednesday up 3 1/2 cents at US$3.04; and March settled up 4 cents at US$3.20 3/4, just below the 20-day moving average of US$3.22.

 

Commodity funds were light net buyers after selling 3,000 futures early. ABN, Rand Financial, O'Connor and Co. and Fimat were featured late buyers, brokers said.

 

Cash spot U.S. SRW wheat basis bids were steady to firm Wednesday; spot midday Gulf SRW wheat basis bids firmed 1 cent, grain sources said.

 

In overnight U.S. wheat export news, Iraq bought 200,000 tonnes of 2005-06 U.S. hard red winter wheat, the USDA said.

 

In global wheat news, India Wednesday ruled out imports of wheat in the coming months, citing adequate domestic stocks to meet local demand.

 

"There is no question of imports, as we will be left with some of our own carry-forward stocks at the end of the marketing year, after meeting the domestic requirements," Minister of State for Food, Akhilesh Prasad Singh, said on the sidelines of an official function.

 

CBOT traders have speculated that India would import wheat since early fall for the first time in six years, when India began trading CBOT soft red winter wheat futures for the first time. Traders said Wednesday the news was bearish for CBOT wheat.

 

 

Kansas City Board of Trade

 

KCBT December settled Wednesday up 9 3/4 cents at US$3.69 per bushel; and March wheat ended up 7 cents at US$3.70 1/2, above the 20-day moving average of US$3.68 1/2.

 

Frontier Trading sold 500 December and bought 200 March and 100 July, Man Financial bought 200 March and 200 May, Refco Inc. bought 150 March and 100 July and UBS bought 200 March and sold 200 May and 100 July, broker said.

 

In spread trade, Fimat spread 1,000 December/March and 800 March/December; Cargill Investor Services and UBS each spread 600 December/March; and ADM Investor Services spread 250 March/July, they said.

 

Deferred KCBT July-September 2006 contracts again found light support Wednesday from the U.S. Department of Agriculture's report Monday that 52% of the winter wheat crop was in good-to-excellent condition, down 3 percentage points from the previous week.

 

Most of the crop deterioration was found in southern U.S. HRW wheat-growing states, particularly Oklahoma and Texas.

 

Cash spot U.S. HRW cash basis bids were steady to firm; spot midday U.S. Gulf HRW basis bids were steady, sources said.

 

 

Minneapolis Grain Exchange

 

MGE December wheat ended Wednesday up 7 1/2 cents at US$3.72; and MGE March closed up 4 1/4 cent at US$3.76 1/2, above the 20-day moving average of US$3.74 1/2.

 

Cash U.S. spring wheat basis bids were steady to firm Wednesday, with cash trade slow as residents across parts of the Dakotas continued to clear this week's snowfalls, cash sources said.

 

Minneapolis wheat rail receipts totaled 131 cars versus 55 cars last year.