January 25, 2006

 

US Wheat Outlook on Wednesday: Up 2-3 cents on technicals; weather eyed

 

 

U.S. wheat futures were called to open up 2-3 cents per bushel Wednesday on followthrough technical buying and crop concerns amid dry weather in the U.S. Southern Plains and cold conditions in Eastern Europe, brokers said.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed up 3 1/4 cents at $3.35 3/4 per bushel. First resistance for CBOT March was seen at $3.33 1/2 -Tuesday's high - and then at $3.35 1/2. First support was put at $3.30 and then at $3.27.

 

Wheat traders continued to track weather forecasts for the drought-stressed U.S. Southern Plains, particularly for key hard red winter wheat growers Texas and Oklahoma.

 

"The best opportunity (for precipitation) is probably on Friday night and Saturday, with less than 0.10 (inch) over the western portions of the (HRW) belt and less than 0.25 inch in the east," said Mike Palmerino, a meteorologist with Meteorlogix weather service.

 

"It could be rain or snow in the western areas and would probably be rain in the eastern belt," he added. "There was no change in the forecast from yesterday's outlook."

 

In Eastern Europe, unusually cold temperatures in Ukraine since Jan. 18 have caused the soil temperature to fall to between minus 12 and minus 17 degrees Celsius, threatening to damage winter grains, according to the country's national weather center.

 

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

 

In U.S. wheat export news, South Korea bought 19,000 tonnes of U.S. wheat, sources said.

 

In global wheat news, India's wheat crop is expected to total 75.5 million metric tonnes in 2006 with market arrivals from the upcoming harvest likely beginning in the third week of March, the federal government said Wednesday. Another 150,000 tonnes of wheat will be released this month on top of an equivalent quantity which has already been released in January.

 

The move to release more wheat from the government's stocks is aimed at stabilizing local prices, which are at a record high of over INR10,400/tonne in many parts of the country, sources said.

 

Still, Indian analysts said they remained skeptical about achieving this year's crop estimate if the last two years were any indication; bad weather just ahead of March harvest hurt wheat output in 2004 and 2005.

 

Speculation that India might need to import wheat underpinned CBOT wheat prices late last year but has been repeatedly dashed by the Indian government.