February 23, 2006

 

US Wheat Outlook on Thursday: Seen 2-3 cents lower on follow through

 

 

Wheat futures at the Chicago Board of Trade are expected to open 2-3 cents lower based off of overnight activity and follow through weakness from Wednesday, sources said.

 

In overnight e-CBOT trading, March wheat fell 2 3/4 cents to US$3.62 3/4 per bushel, May lost 2 3/4 cents to US$3.74 3/4, and July fell 2 1/4 cents to US$3.85.

 

Overnight at the KCBT, March wheat fell 3 cents to US$4.28 1/2, and May fell 2 3/4 cents to US$4.36 1/4.

 

There is not much news to go on this morning, and nothing has really changed from Wednesday, so the market may try the downside to start, continuing Wednesday's weakness, a commission house analyst said.

 

The funds were not active Wednesday and market direction has been recently set by speculative interest based on the weather in the hard red belt, he added.

 

Mostly dry weather is expected over the next several days in the Central Plains with a chance for scattered showers in parts of central and northeast Texas, DTN weather said.

 

Temperatures over the next several days are expected to average above normal Thursday and Friday, DTN weather said.

 

On technical charts, the bulls still have solid technical momentum despite Wednesday's profit taking, a technical analyst said. He pegs first resistance for CBOT May wheat at US$3.80 and then at US$3.84 1/2, Wednesday's high. First support is at US$3.73 and then at US$3.70.

 

For May KCBT, it will take a close below support at US$4.25 to provide the bears with some fresh downside technical momentum, the analyst said. He sets first resistance at US$4.45, Wednesday's high and then at US$4.50 1/2, the contract high. First support is seen at US$4.37, Tuesday's low and then at US$4.35.

 

Cash wheat basis bids were mostly unchanged Thursday morning. Soft red wheat basis bids were unchanged to higher with Cincinnati unchanged at 7 cents under CBOT March.

 

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

 

Spring wheat basis bids were mostly unchanged with Minot, N.D. 3 cents lower at 28 cents under MGE March futures.

 

In other wheat news, Australia's availability of export wheat this marketing year has risen to 17.7 million metric tonnes from about 15 million tonnes in the year ended Sep. 30, 2005, the chairman of monopoly exporter AWB Ltd. (AWB.AU) said Thursday.

 

The additional supply of wheat for export comes from a bumper crop of 25 million tonnes produced this crop year ending March 31, up from last year's crop of about 22 million tonnes, he said.

 

Japan's Ministry of Agriculture, Forestry and Fisheries purchased 125,000 metric tonnes of milling wheat in its weekly export tender Thursday, a Tokyo based trader said. MAFF bought 60,000 metric tonnes of U.S. wheat, 40,000 tonnes of Canadian wheat and 25,000 tonnes of Australian wheat.