December 8, 2005

 

US Wheat Review on Wednesday: Weakens on canada crop, egypt, technicals

 

 

U.S. wheat futures ended lower Wednesday on news of a larger-than-expected Canadian wheat crop, a lack of U.S. wheat sales to Egypt and little confirmation of this week's news of fresh Iraqi purchases of U.S. wheat, brokers said.

 

Statistics Canada reported Wednesday that Canada's 2005-06 wheat production should total 26.78 million metric tonnes, up from its October estimate of 25.547 million tonnes and last year's 25.860 million tonnes.

 

In overnight export news, Egypt bought 85,000 metric tonnes of Russian wheat and no U.S. grain; moreover, there was no confirmation of this week's news that Iraq was buying 200,000 tonnes of U.S. wheat.

 

In overnight wheat export news, Taiwan bought 83,160 metric tonnes of U.S. wheat, and Syria canceled a tender to sell 50,000 tonnes of wheat.

 

CBOT December wheat ended Wednesday down 2 1/2 cents at US$2.97 1/4, and March settled down 2 1/2 cents at US$3.13 1/4 after falling within a 1/2 cent of its contract low of US$3.10 per bushel.

 

Funds were net sellers, led by Refco Inc.'s sale of 1,000 March, O'Connor and Co.'s sale of 800 March and Bunge and Fimat's sale of 500 March, brokers said.

 

Cargill Inc. bought 400 March while Goldenberg Hehmeyer and R.J. O'Brien were each light buyers of March.

 

There were 827 deliveries posted Wednesday against CBOT December wheat, with scattered stopping.

 

Traders anticipated the U.S. Department of Agriculture would report Thursday weekly U.S. wheat export sales of 350,000 to 500,000 metric tonnes; they also anticipated the government on Friday would slightly cut its 2005-06 wheat end stocks estimate to 524 million bushels from last month's 530 million.

 

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

 

In other global wheat news, the Indian government said it would consider a cut in monthly grain supplies under its subsidized sales program, a senior government official said Wednesday. Each Indian household is now eligible to buy 35 kilograms foodgrains monthly under the program.

 

"If the proposal gets through, government's annual wheat requirements will be only 15.6 million tonnes compared to actual distribution of 18.3 million tonnes in 2004-05," the official said.

 

U.S. wheat traders have speculated that India will need to import wheat due to low stocks before its crop year ends on March 31. However, Indian officials have steadfastly denied the need to import wheat near-term.

 

 

Kansas City Board of Trade

 

KCBT December wheat settled down 1 cent at US$3.62, and March wheat ended down 2 1/2 cents at US$3.65 after breaking earlier through its 100-day moving average of US$3.64 1/2 and finding support at the 200-day moving average of US$3.60 1/2.

 

Commercial buying was also noted near the lows, one broker said.

 

Prudential Financial sold 800 March, Frontier Trading bought 450 March and ADM Investor Services sold 200 March.

 

In spread trade, ADM Investor Services bought 200 March/July and bought 200 May/July while Fimat Futures bought 120 December/March and sold 50 March/July.

 

Deferred KCBT wheat again failed to react much to winterkill fears amid cold U.S. Southern Plains temperatures, either due to snow cover protection or increased planted acreage estimates, traders said.

 

The KCBT/CBOT March spread settled Wednesday at 51 3/4 cents, premium KCBT; the spread also closed Tuesday at 51 3/4 cents.

 

The KCBT/CBOT spread, along with buying high-protein MGE futures and selling CBOT wheat, became popular this summer as demand for higher-protein U.S. food wheat began outpacing that for lower-protein U.S. wheat.

 

There were nil deliveries posted Wednesday against KCBT December wheat.

 

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

 

 

Minneapolis Grain Exchange

 

MGE December wheat ended down 3 3/4 cents at US$3.63, and MGE March closed down 1 1/4 cents at US$3.69 3/4 per bushel.

 

Zero deliveries were posted against Minneapolis Grain Exchange December wheat Wednesday.

 

Cash U.S. spring wheat bids were steady to 10 cents lower Wednesday amid good farmer sales, sources said.

 

Minneapolis wheat rail receipts Wednesday totaled 244 cars versus 132 cars last year.