January 11, 2006

 

US Wheat Outlook on Wednesday: Down 1 cent following e-CBOT, USDA awaited

  

 

U.S. wheat futures were called to open down 1 cent per bushel Wednesday following weak overnight trade and on positioning ahead of Thursday's U.S. Department of Agriculture winter wheat seedings and quarterly stocks data, brokers said.

 

"It's a wait and see market, both for tomorrow's report and to see if any index fund buying emerges," one broker said.

 

Commodity index funds, which buy and hold positions, mostly posted double-digit returns in 2005, and traders have been expecting new monies and index reweighings in U.S. wheat futures early this year. Tuesday's late rally in wheat was attributed to late index fund buying, CBOT wheat brokers said.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed down 1 3/4 cents at US$3.27 1/2 per bushel.

 

First resistance for CBOT March was seen at US$3.30 1/4--the top of Monday's downside price gap on the daily bar chart. First support was seen at US$3.23 3/4--this week's low-and then at US$3.20.

 

Analysts surveyed by Dow Jones Newswires expected the government to forecast a year-over-year 5.6% increase in U.S. winter wheat plantings, a 3% boost in U.S. hard red winter wheat seedings, a 19% gain in soft red winter wheat plantings and a 5.2% jump in white wheat plantings.

 

The USDA was expected to report Dec. 1 quarterly U.S. wheat stocks at 1.418 billion bushels, below last year's 1.430 billion.

 

And grain analysts forecast the USDA would estimate 2005-06 U.S. wheat ending stocks at 522 million bushels, below its December forecast of 530 million and below last year's 540 million.

 

The USDA will release its report at 7:30 a.m. CST Thursday.

 

Cash U.S. hard red winter wheat basis bids were steady to narrowly mixed; soft red winter wheat basis bids were mixed, with a 10-cent loss in the Kansas City truck bid and a 4-cent gain in Memphis; and spring wheat basis bids were steady to weak, with a 5-cent loss in the Minneapolis bid, grain merchandisers said.

 

In U.S. wheat export news, South Korean companies bought 11,000 metric tonnes of U.S. wheat, sources said.

 

In global wheat news, Russia bought 6,480 metric tonnes of milling grain at the intervention trading session held Wednesday at the national commodities exchange in Moscow, all of it third-grade soft milling.

 

Total Russian purchases to date since intervention purchases began Aug. 29 were 1,656,850 tonnes, including 1,428,990 tonnes of third-grade wheat, 186,570 tonnes of fourth-grade wheat and 41,290 tonnes of milling rye.