February 14, 2006

  

US Wheat Outlook on Tuesday: Steady-easier; searching for direction

  

 

Wheat futures at the Chicago Board of Trade are expected to begin trading steady to easier on Tuesday as the lack of fresh inputs has the market searching for direction, traders and analysts said.

 

In overnight e-CBOT trading, March wheat fell 1/2 cent to US$3.47 1/2 per bushel, May wheat slipped 3/4 cent to US$3.59 1/4, and July fell 1/4 cent to US$3.68 1/2.

 

Overnight at the KCBT, March wheat fell 2 3/4 cents to US$4.12 1/4 and May lost 3 cents to US$4.16.

 

There isn't much fresh news out Tuesday morning so commodity trading funds could help set the tone for the market, a floor trader said. Australia raised its wheat crop estimate, so that is not positive, he added.

 

The Australian Bureau of Agricultural & Resource Economics or Abare, increased its estimate of 2005-06 wheat to 25.1 million metric tonnes from its previous estimate of 24.1 million tonnes.

 

The market is still waiting on the Iraqi wheat tender and whom they will purchase wheat from, a floor analyst said. On Monday, wheat futures were weaker as traders cited reports that Iraq was interested in Canadian or E.U. wheat to source its delayed tender for up to 1 million metric tonnes of wheat as U.S. wheat prices were too high.

 

On technical charts, no serious chart damage has occurred despite prices hitting a two-week low Monday, a technical analyst said. The next upside price objective for May CBOT wheat is closing prices above last week's high of US$3.76, with a close below US$3.50 providing the bears with fresh downside momentum, the analyst said. He sees first resistance at US$3.67, Monday's high and then at US$3.70. First support is seen at US$3.59 1/2, Monday's low and then at US$3.56.

 

For May KCBT, it will take a close below solid support at US$4.10 to provide bears with fresh downside momentum, the analyst said. He pegs first resistance at US$4.25 and then at US$4.30. First support is seen at Monday's low of US$4.18 and then at US$4.15.

 

There is a chance for some light precipitation in the Central and Southern Plains over the next five days, DTN Meteorlogix weather said. Temperatures will average above normal in the beginning of the period but turn below-to-much-below normal in the second half of the period, Meteorlogix said.

 

Cash wheat basis bids were unchanged to mostly lower Tuesday morning. Soft red wheat basis bids were unchanged to higher with Evansville, Ind. up 3 cents to 4 cents under CBOT March.

 

Hard red winter wheat basis bids were mostly unchanged with Manhattan, Kansas unchanged at 15 cents under KCBT March wheat.

 

Spring wheat basis bids were unchanged with Minot, N.D. 5 cents lower at 30 cents under MGE March futures.

 

In global wheat news, Japan's Ministry of Agriculture, Forestry and Fisheries will tender for 120,000 metric tonnes of milling wheat Thursday, a Tokyo-based trader said. MAFF is seeking to buy 60,000 tonnes of U.S. wheat in the tender, the trader said.

 

The president of the Grains Council of Australia, a national grower's lobby, said the system of exporting wheat in that country must change in the wake of the inquiry into whether monopoly exporter AWB Ltd. broke Australian law by paying kickbacks to the deposed Iraqi regime of Saddam Hussein.

 

India's total government stocks of wheat and rice were 20.3 million metric tonnes as of Feb. 1, a senior government official said Tuesday.

 

Indian wheat stocks were down 31.5% at 5.0 million tonnes, but the official said they were more than ample to meet local demand until mid-May, when the local harvest and imported wheat are expected to be available to meet local requirements.