March 9, 2006

  

US Wheat Outlook on Thursday: Down on wet US Midwest weather, e-CBOT

  

 

U.S. wheat futures are expected to begin trading 2-3 cents lower Thursday as precipitation in the U.S. soft red wheat belt and weaker prices in overnight activity are expected to weigh on futures at the start of trading, floor sources said.

 

In overnight e-CBOT trading, March wheat fell 2 3/4 cents to US$3.73 1/4 per bushel, May fell 2 3/4 cents to US$3.81 3/4, and July dropped 3 cents to US$3.92 3/4.

 

Overnight at the KCBT, March slipped 1 cent to US$4.38, May ended down 1/4 cent at US$4.43 1/4, and July rose 1/4 cent to US$4.48 1/2 per bushel.

 

The U.S. Midwest received good moisture overnight which helps the soft red wheat crop and there was some light precipitation in parts of Kansas and Oklahoma this morning, a floor analyst said.

 

Rain or thunderstorms are expected across much of the eastern U.S. Midwest Thursday before drier weather moves into the area Friday, DTN Meteorlogix weather said. Additional precipitation is forecast for the region over the weekend, with amounts ranging from .50-1.50 inches and high coverage. Temperatures in the period are expected average to above normal, DTN Meteorlogix weather added.

 

Mostly dry weather is expected in the U.S. Central Plains Thursday except in the southeast sections of the region. There is a chance for light precipitation in the northwest sections of the region Friday along with a few light showers Saturday, DTN Meteorlogix weather said.

 

Although there were good rains overnight, there is a supply/demand report out Friday and the market is usually cautious ahead of a report, a CBOT floor trader said.

 

The U.S Department of Agriculture is scheduled to release the March supply/demand report Friday morning at 7:30 a.m. CST (1330 GMT).

 

An average of 11 analysts surveyed by Dow Jones Newswires expects U.S. wheat ending stocks at 543 million bushels, 1 million bushels above than the 542 million estimated by the USDA in February.

 

U.S. weekly export sales totaled 440,800 metric tonnes for the week ended Mar. 2. Sales of 327,800 metric tonnes were for the 2005-06 crop year with 113,000 metric tonnes sold for the 2006-07 crop year.

 

Analysts had expected wheat sales between 200,000-400,000 metric tonnes.

 

On technical charts, first resistance in CBOT May wheat is seen at US$3.85 1/2, Wednesday's high and then at US$3.90 1/2. First support is seen at US$3.79 1/2, Wednesday's low and then at US$3.74, this week'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$4.45, and then at US$4.50. First support is seen at US$4.39, this week's low and then a US$4.34 1/2, this week's low, he said.

 

Cash wheat basis bids were unchanged to lower Thursday morning. Soft red wheat basis bids were mostly lower with Cincinnati down 3 cents at 30 cents under the May future.

 

Hard red wheat basis bids were mostly unchanged with Hutchinson, Kan. unchanged at 17 cents under the May.

 

Hard spring wheat basis bids were unchanged with Minot, N.D. unchanged at 35 cents under the May future.

 

At the CBOT, 162 contracts were issued for delivery against the March contract. The house account of ADM Investor Services issued 156 contracts with the customer account of UBS Securities stopping 106 contracts.

 

At the MGE, 90 contracts were issued for delivery against the March contract. Country Hedging issued 77 contracts for delivery, with ADM Investor Services stopping 77 contracts.

 

There were no wheat deliveries posted against the March contract at either the KCBT or the MGE on Thursday.

 

In other wheat news, Wheat Australia, a new wheat exporting company has been set up to sell wheat exports to Iraq, and is wrapping up tender details to be submitted to the Iraqi Grain Board. For now the new firm has taken the place of Australia's traditional wheat exporter AWB Ltd. (AWB.AU) for wheat exports to Iraq, sources said.

 

Japan's Ministry of Agriculture, Forestry and Fisheries has bought 160,000 metric tonnes of wheat in a tender concluded Thursday, a ministry official said. Included in the sale was 95,000 metric tonnes from the U.S., 20,000 tonnes from Canada and 45,000 tonnes from Australia.

 

Ukraine exported 4.3 million metric tonnes of wheat from July 1, 2005 through Jan. 31 and is on track to export a total of 5.5 million metric tonnes in the 2005-06 marketing year, market analysis company APK-Inform reported Thursday, quoting the state statistics company.

 

In 2004-05, Ukraine exported 4.38 million tonnes of wheat.