February 28, 2006
US Wheat Outlook on Tuesday: Steady to 1 cent higher on weather
Wheat futures at the Chicago Board of Trade are forecast to open steady to 1 cent higher, as continued dry weather in the U.S. Central Plains and follow through buying from Monday's late gains should support futures at the start, floor analysts said.
In overnight e-CBOT trading, March wheat fell 1 1/2 cents to US$3.71 3/4 per bushel, May finished 1 cent higher at US$3.86 3/4, and July gained 1/2 cent to US$3.96 1/2.
Overnight at the KCBT, March wheat fell 1 1/4 cents to US$4.39 1/4, and May slipped 1 1/2 cents to US$4.45.
The hard red wheat belt is still extremely dry and the temperatures are above average as well, a floor analyst said. Conditions in Texas remain poor, he added.
In addition, the funds came in and bought wheat late, so the market will wait and see if the funds return Tuesday, he added.
Winter wheat crop conditions in Texas continue to be impacted by the dry weather in the region. In the latest weekly crop conditions report, 89% of the Texas wheat crop was rated in poor-to-very-poor condition, up two percentage points from the previous week.
Dry weather with very few light showers are expected Wednesday and Thursday, with a chance of scattered showers Friday into Saturday, DTN Meteorlogix weather said. Temperatures will average well above normal Tuesday and Wednesday and above normal through Friday, Meteorlogix added.
India will buy 500,000 metric tonnes of Australian wheat at a price of around US$179 per metric tonne, sources said. India recently announced its intention to import 500,000 tonnes of wheat to bolster domestic stocks.
On technical charts, it will take a close below US$3.70 to provide bears with fresh downside technical momentum, a technical analyst said. First resistance for CBOT May wheat is seen at US$3.88, the contract high and then at US$3.90. First support is at US$3.80 and then at US$3.75.
For May KCBT, first resistance is seen at US$4.47, Monday's high and then at US$4.50 1/2, the contract high. First support is seen at US$4.40, and then at US$4.36, Monday's low.
Cash wheat basis bids were unchanged Tuesday morning. Soft red wheat basis bids were mostly unchanged with Cincinnati 3 cents lower at 10 cents under the March future.
Hard red wheat basis bids were unchanged with Manhattan, Kan., unchanged at 15 cents under the March.
Hard spring wheat basis bids were mostly unchanged with Minot, N.D., unchanged at 36 cents under the May future.
Deliveries against the CBOT March contract totaled 999 contracts. Large issuers included the house account of ABN Amro, which issued 884 contracts. Large stoppers included the customer account of Deutsche Bank which stopped 462 contracts and the customer account of ABN Amro which stopped 196 contracts.
At the Minneapolis Grain Exchange, 477 deliveries were posted against the March contract. Country Hedging issued 385 contracts and Prudential Financial issued 92 contracts. ADM stopped 423 contracts.
At the KCBT 594 contracts were issued for delivery against the March contract. The house account of ADM Investor Services issued 594 contracts with the customer account of FC Stone stopping 394 contracts.
In other wheat news, Japan's Ministry of Agriculture Forestry and Fisheries will tender for 167,000 metric tonnes of wheat in a tender to be concluded Thursday, a ministry official said Tuesday. Included in this total is 85,000 tonnes from the U.S.
Kazakhstan's State reserve has issued a decree to purchase 558,308 metric tonnes of soft milling wheat harvested in 2006, according to the government press service Tuesday.
Australia won't use foreign companies to ship wheat to Iraq preferring to use local companies in the trade, Agriculture Minister Peter McGauran said Tuesday.
In February, Iraq suspended dealing with Australia's monopoly wheat exporter AWB Ltd. (AWB.AU) until after an inquiry reports to government by March 31 into whether the company breached Australian law in paying kickbacks to Saddam Hussein's regime.
