January 13, 2006

 

US Wheat Outlook on Friday: Flat-up on pre-holiday positioning

 

 

U.S. wheat futures were called to open flat to firm on Friday on possible follow-through buying, including possible index fund buying in Chicago, and positioning ahead of the holiday weekend, brokers said.

 

Chicago Board of Trade agricultural futures close at their normal time on Friday but will remain closed Monday in observance of the Dr. Martin Luther King Jr. holiday.

 

In the overnight e-CBOT session, most-active March wheat at the CBOT closed steady at US$3.33 1/4 per bushel.

 

First technical resistance was seen at US$3.35--Thursday's high--and then at US$3.38. First support lies at US$3.30 and then at US$3.27 1/2.

 

Cash U.S. hard red winter wheat basis bids were steady Friday; soft red winter wheat basis bids were mixed, with a 3-cent gain in Evansville, Ind. and a 2-cent loss in Memphis, Tenn.; and spring wheat basis bids were steady to weak, with a 2-cent loss in Grand Forks, grain merchandisers said.

 

Droughty conditions in the southern Great Plains have prompted worries about the dormant crop's condition. Meteorlogix weather service on Friday forecast light snow in the western HRW belt Monday and lingering snow in the east on Tuesday. Overnight U.S. wheat export sales were quiet.

 

In the Northern Plains, spring wheat farmers could see a big drop in income due to a 23-cent drop in the spring wheat loan rate in all North Dakota counties for the 2006 crop year, the North Dakota Farmers Union said Thursday.

 

The loan rate sets a floor price for a crop. Federal subsidies essentially cover the difference between the government-set loan rate and lower market prices.

 

In global wheat news, India eased rules on selling wheat in the open market amid tightening stocks states that have surplus stocks of wheat will be asked to shift the grain to states that face a shortage.

 

Prices of wheat in India's open market have jumped in recent weeks on tight supplies and fears of a shortage; however both government and industry officials have denied the need for imports ahead of the spring harvest.

 

Indian wheat stocks as of Jan. 1 were down 29.2% at 6.3 million tonnes, but the official said they are more than ample to meet local demand until April 30, by which time the local harvest may have arrived in the market.

 

In global wheat weather news, Europe's wheat regions were forecast to receive slightly above-normal rains for the next three months, with the exception of the major producing nation of France, according to agricultural forecasters from Earth Satellite's Cropcast Friday.