January 12, 2006

 

US Wheat Outlook on Thursday: Down 2-3 cents on USDA, lower soy open calls

  

 

U.S. wheat futures were called to open down 2-3 cents per bushel Thursday on bearish U.S. Department of Agriculture quarterly and ending wheat stocks data and following calls for an 8-10 cent lower open in Chicago Board of Trade soybean futures, brokers said.

 

The USDA early Thursday reported U.S. wheat stocks as of Dec. 1 totaled 1.430 billion bushels, above analysts' estimates of 1.418 billion and matching last year's 1.430 billion bushels.

 

The government put 2005-06 U.S. wheat ending stocks at 542 million bushels, up 12 million from its December estimate and 20 million above analysts' estimates.

 

"The increase of 12 million bushels on the ending stocks again gives us a bearish tone and brings back to the forefront that we need to increase the pace of demand," said Shawn McCambridge, a grain analyst at Prudential Financial.

 

"Looking down through the class numbers, hard red spring is up 20 (million bushels) mainly because we're bringing more wheat in, with the Canadian ban being lifted," he added. "The rest of them are pretty reasonable - soft red winter wheat down 14 million - we'll see, and I won't put much merit in that."

 

In its much-anticipated U.S. winter wheat seedings estimate, the USDA said U.S. farmers planted this fall 41.367 million acres of winter wheat, with 29.9 million going to hard red winter wheat, 7.3 going to soft red winter wheat and 4.2 million going to white winter wheat.

 

"By my estimate, I was expecting more acreage to go in. Evidently farmers weren't as impressed with the fall conditions as I was," Prudential's McCambridge said. "But looking down through here, the winter wheat could provide some support. You only had 200,000 (acres) increase in Kansas plantings. That's a little bit of a concern because of the problems we've having in the southern areas - Oklahoma and Texas. Oklahoma and Texas combined were up about 400,000 acres. So it increases the need for good spring conditions because we certainly have taken some losses that we're not going to get back in the southern Plains."

 

The USDA's weekly U.S. wheat export sales report somewhat mitigated the bearish tone. The government reported weekly wheat export sales, old- and new-crop combined, at 376,000 bushels.

 

In overnight export news, Japan bought 61,000 tonnes of U.S. wheat in an overall tender for 146,000 tonnes.

 

In the overnight e-CBOT session, most-active March wheat at the CBOT closed down 3/4 cent at US$3.29 3/4 per bushel.

 

First technical resistance for CBOT March was seen at US$3.31--Wednesday's high--and then at US$3.35. First support was put at US$3.26--Wednesday's low--and then at US$3.23 3/4--this week's low--and then at US$3.20.

 

Cash U.S. hard red winter wheat basis bids were mostly steady Thursday; soft red winter wheat basis bids were steady to firm, with a 5-cent increase in the Kansas City bid; and spring wheat basis bids were steady, grain merchandisers said.

 

In global wheat news, Indian wheat sources said the country's crop could reach 74 million to 76 million metric tonnes this year depending on upcoming weather. India produced 72 million tonnes of wheat last year.