January 19, 2006

  

US Wheat Outlook on Thursday: Flat-Up 1 cent on recovery, HRW crop worries

 

 

U.S. wheat futures were called to open flat to up 1 cent Thursday in a recovery from recent losses, led by possible gains in Kansas City Board of Trade hard red winter wheat futures on tight old-crop HRW wheat supplies and drought-led U.S. HRW wheat crop concerns, brokers said.

 

"Since the New Year, the market has seen more of a focus on the flow of money which has caused a frustration for the fundamental trader," said one KCBT source late Wednesday. "Price action today, to us, suggests that the index/fund positions have been established. The fact that the indexes play for dollars and not dimes means that they will not easily be chased out of their long positions. Trend-following funds on the other hand, should be the 'X' factor."

 

Concerns about wheat in Russia and Ukraine, two key global wheat suppliers, could provide some support to CBOT wheat, but Chicago traders this week have noted that ample U.S. SRW supplies have so far mitigated concerns.

 

Extreme cold in Russia, with night temperatures in many regions of minus 30-36 degrees Celsius and as low as minus 45 degrees Celsius in the Volga Federal District, could harm the crop, Russian officials said Wednesday.

 

In the Ukraine, winter wheat acreage was cut by nearly 19% due to dry fall planting conditions and low prices, a U.S. Department of Agriculture attache said, adding it was doubtful whether spring wheat planting will pick up the slack, especially when farmers consider adverse economic factors.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed steady at US$3.22 1/2 per bushel.

 

Cash U.S. hard red winter wheat basis bids were steady-weak Thursday; soft red winter wheat basis bids were steady-firm; and spring wheat basis bids were steady-weak, grain merchandisers said.

 

In U.S. wheat export news, Japan bought 70,000 tonnes of U.S. wheat in an overall tender for 115,000 tonnes and South Korea sought 20,000 tonnes of U.S. wheat in a tender to be concluded Friday.

 

The USDA will release its weekly U.S. wheat export sales data Friday due to this week's holiday.

 

In global wheat news, Pakistan may import 400,000-500,000 metric tonnes of wheat in 2006 despite an expected bumper wheat crop this year, Pakistani officials said.

 

In India, the Agriculture Minister said the government is selling more wheat in the domestic market to control prices amid tight supplies.

 

As of Jan. 1, India's wheat stocks totaled around 6.3 million metric tonnes, compared with 8.9 million tonnes on the same day last year.

 

"To replenish stocks, the government will start purchasing wheat 15 days in advance from the usual practice of April 1," said Indian Agriculture Minister Sharad Pawar.