March 6, 2006

 

US Wheat Outlook on Monday: Down 7-9 cents on e-CBOT, moisture concerns

  

 

U.S. wheat futures are expected to begin trading 7-9 cents lower Monday as weekend moisture in parts of the parched U.S. Central Plains and forecasts for additional precipitation is expected to pressure prices on the opening, floor traders said.

 

In overnight e-CBOT trading, March wheat fell 8 1/4 cents to US$3.65 1/4 per bushel, May fell 7 3/4 cents to US$3.77 1/4, and July dropped 8 1/2 cents to US$3.87 1/2.

 

Overnight at the KCBT, May fell 10 1/4 cents to US$4.35 1/4 and July also fell 10 1/4 cents to US$4.38 1/4.

 

The moisture outlook for much of the central U.S. looks favorable over the next 7-10 days and that will pressure the market, a floor analyst said.

 

In addition, news that Iraq purchased only 150,000 metric tonnes of U.S. wheat is disappointing as the market anticipated a larger amount, a CBOT-floor trader said.

 

Lower outside markets and expected weakness in corn and soybean futures could also add pressure, the trader said.

 

Short and long range charts continue to show several disturbances moving through the U.S. Central Plains this week and next week, DTN Meteorlogix weather said. Scattered precipitation occurred over the weekend with amounts a trace-.25 inch and locally heavier, Meteorlogix said. It will be mainly dry Monday and Tuesday with a chance for scattered showers and rain Wednesday into Thursday. Rainfall should average .10-.50 inch and locally heavier in the northern and eastern areas but .10 inch or less through the southwest. Temperatures will average above normal Monday and Tuesday, DTN Meteorlogix added.

 

Iraq purchased 500,000 metric tonnes of wheat from Canada and 150,000 tonnes of U.S. wheat, Khalil Assi, the head of the Iraqi Grain Board said Sunday. In addition, Iraq is interested in purchasing up to 350,000 metric tonnes of Australian wheat, though not from Australia's AWB Ltd., and was interested in purchasing 150,000 tonnes of German wheat.

 

On technical charts, first resistance in CBOT May wheat is seen at US$3.86 and then at US$3.90 1/2, last week's contract high. First support sits at US$3.80 and then at US$3.77, Friday's low, a technical analyst said.

 

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. First resistance is seen at US$4.46, Friday's high and then at US$4.50. First support is seen at US$4.40 Friday's low and then at US$4.35.

 

Large non-commercial speculators are net long a combined 14,256 CBOT wheat futures and options as of Feb. 28, the Commodity Futures Trading Commission reported Friday.

 

Large non-commercial speculators are net long 47,371 KCBT wheat futures and options on futures as of Feb. 28, the CFTC reported.

 

At the MGE, large non-commercial speculators are net long 11,367 wheat futures and options on futures contracts, the CFTC reported Friday.

 

Cash wheat basis bids were mixed Monday morning. Soft red wheat basis bids were mostly unchanged with Cincinnati down 5 cents at under 26 cents under the May future.

 

Hard red wheat basis bids were mostly unchanged with Hutchinson, Kan. unchanged at 18 cents under the May.

 

Hard spring wheat basis bids were mixed with Minot, N.D. one cent lower at 35 cents under the May future.

 

At the CBOT, 70 contracts were issued for delivery against the March contract. The customer account of the USA Trading division of Man Financial issued 48 contracts with the customer account of ABN Amro stopping 51.

 

In other wheat news, Iraq purchased a total of 3.18 million metric tonnes of wheat from June 30, 2005 through the end of February, a statement from the Iraqi cabinet said.

 

Pakistan is investigating the possibility of exporting surplus wheat after making final estimates of the crop size, a senior government official said Monday. Pakistan wheat crop target is 22 million metric tonnes in 2006 compared to 21.6 million last year, said Qadir Bux Baloch, the agriculture development commissioner at the Ministry of Food and Agriculture.

 

On Monday, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 10:00 a.m. CST.