March 1, 2006

 

US Wheat Outlook on Wednesday: Seen 2-4 cents lower on follow through, e-CBOT

  

 

Wheat futures at the Chicago Board of Trade are forecast to begin trading Wednesday 2-4 cents lower as follow through selling from Tuesday's weak close is expected to weigh on prices at the start, floor analysts said.

 

In overnight e-CBOT trading, March wheat declined 4 1/4 cents to US$3.66 per bushel, May fell 2 3/4 cents to US$3.78 1/4, and July fell 5 cents to US$3.88 1/2.

 

Overnight at the KCBT, May dropped 8 cents to US$4.37 1/2.

 

The market should start out lower, Tuesday's close was weak and the overnight prices continued the trend, a floor analyst said.

 

Wheat has been pretty well saturated with recent new longs and the market has already factored in all of the supportive world wheat news, said John Kleist, of Kleist Ag Consulting.

 

The market could see further consolidation, he added.

 

Dry weather with only very light shower activity is expected Wednesday and Thursday in the U.S. Central Plains, DTN Meteorlogix Weather said. A chance for scattered sprinkles and light showers are possible Friday with amounts from a trace to 0.25 inch and may favor the southern areas, Meteorlogix said.

 

Temperatures are expected to average above or well above normal Wednesday, above normal Thursday and near to above normal Friday, they added.

 

On technical charts, first resistance for CBOT May wheat is seen at US$3.85, and then at US$3.90 1/2, the contract high. First support is seen at US$3.78, Tuesday's low and then at US$3.75.

 

For May KCBT, it will take a close below support at US$4.25 to provide the bears with some fresh downside technical momentum. First resistance is seen at US$4.50, and then at US$4.53 1/2, Tuesday's contract high. First support is seen at US$4.44, Tuesday's low and then at US$4.40.

 

Cash wheat basis bids were unchanged Tuesday morning. Soft red wheat basis bids were mostly unchanged with Cincinnati unchanged 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., 2 cents higher at 34 cents under the May future.

 

Deliveries against the CBOT March contract weren't available Wednesday morning.

 

At the KCBT, 423 deliveries were posted against the March contract. The customer account of FC Stone issued 394 contracts and the house account of Term Commodities stopped 411 contracts.

 

In other wheat news, Australia can continue bidding for Iraqi wheat contracts, said Australian Trade Minister, even though monopoly exporter AWB Ltd. (AWB.AU) will remain suspended from the Iraqi market until an inquiry into its dealing with Iraq's former government has finished.

 

The Australian government has considered but won't export wheat on its own behalf to Iraq to avoid watering down a monopoly currently operated by AWB Ltd., Prime Minister John Howard said Wednesday.

 

China announced this year's minimum purchase price for wheat aiming to protect farmer's incomes, according to the National Development and Reform Commission web site. The price has been set at RMB/1,440, which is higher than the current price of quality white wheat in Shandong province.