January 24, 2006

  

US Wheat Outlook on Tuesday: Steady to up 1/2 cent on consolidation

 

 

U.S. wheat futures were called to open steady to firm Tuesday in consolidation-type trade following Monday's losses led by long liquidation or profit-taking in Kansas City Board of Trade hard red winter wheat futures, brokers said.

 

Monday's report from Texas that the state's winter wheat crop was 85% in poor to very poor shape, a deterioration from the previous week's 83% in that shape, was expected to underpin prices, some traders said.

 

A tight old-crop hard red winter wheat carryout and fears of winterkill in Russia's crop were also seen supporting U.S. wheat futures, they noted.

 

"Wheat is torn between the support from Kansas City but the upper (price) limits in both Chicago and Kansas City have been good resistance due to export sales," said John Kleist, of Kleist Ag Consulting.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed up 1/2 cent at US$3.26 1/2,

 

First resistance for CBOT March was seen at US$3.31 - Monday's high - and then at US$3.35 1/2. First support lies at US$3.24 1/2 - Monday's low - and then at US$3.21 1/2.

 

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

 

Monday's estimate from Informa Economics for 2006-07 U.S. spring wheat seedings of 13.87 million acres, down from last year's 14.036 million, was expected to have little impact Tuesday on Minneapolis Grain Exchange futures, brokers said.

 

Overnight U.S. wheat export sales were quiet while Japan tendered for 121,000 tonnes of wheat for March 15-April 15 shipment, including 80,000 tonnes of U.S. wheat.

 

In global wheat news, the International Grains Council Tuesday forecast a slight decline in global ending stocks during the 2006-07 marketing year due to a decline in northern hemisphere sowings mostly in Russia and Ukraine.

 

But overall growing conditions for the winter crops have been favorable, the IGC indicated.

 

Moreover, a reduction in production will likely be partly matched by a decline in feed use, the IGC said.