March 10, 2006

 

US Wheat Outlook on Friday: Steady to easier following USDA report

  

 

U.S. wheat futures are expected to begin trading steady to slightly easier Friday, after weaker prices in overnight trading and the release of the February supply and demand report by the U.S. Department of Agriculture, CBOT floor sources said.

 

In overnight e-CBOT trading, March wheat fell 1 1/2 cents to US$3.69 1/4 per bushel, May slipped 1 cent to US$3.80, and July fell 2 1/4 cents to US$3.91.

 

Overnight at the KCBT, May ended down 3/4 cent at US$4.43, and July declined 2 1/2 cents to US$4.49 per bushel.

 

The USDA estimated 2005-06 U.S. wheat ending stocks at 542 million bushels in March, unchanged from its February estimate, and 1 million bushels below the average analyst estimate of 543 million bushels.

 

In addition, the USDA increased the 2005-06 world wheat ending stocks to 142.6 million metric tonnes from the 142.0 reported in February, and increased its estimate of the 2005-06 Australian wheat crop to 24.5 million metric tonnes from the 24.0 estimated last month.

 

There were no surprises but there was nothing friendly in the report either, a CBOT floor analyst said.

 

There weren't many changes in the report and the market didn't expect any changes, a CBOT floor trader said. The market will continue to trade the weather in the hard red wheat belt and the markets in Chicago and Minneapolis will take their direction from the KCBT, he added.

 

Dry weather with only a few light or very light showers are expected over the next several days in the U.S. Central Plains, with the best chance for precipitation in the far north and far east to southeast areas during Sunday, DTN Meteorlogix weather said.

 

Mainly dry conditions are expected Monday and Tuesday with temperatures average to above normal early in the period and near to below normal late in the period, DTN weather said.

 

On technical charts, it will take a close below last week's low of US$3.71 to provide bears with fresh downside technical momentum, a technical analyst said. First resistance in CBOT May wheat is seen at US$3.85, and then at US$3.87 1/2. First support is seen at US$3.78 1/2, Thursday's low and then at US$3.74, this week's low.

 

For May KCBT, first resistance is seen at US$4.46 1/2, and then at US$4.50. First support is seen at US$4.39 1/2, Thursday's low and then a US$4.34 1/2, this week's low, the analyst said.

 

Cash wheat basis bids were unchanged to lower Friday morning. Soft red wheat basis bids were mostly unchanged with Cincinnati unchanged 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 to lower with Minot, N.D., down 3 cents at 38 cents under the May future.

 

At the CBOT, 67 contracts were issued for delivery against the March contract. The house account of ADM Investor Services issued 45 contracts with the customer account of UBS Securities stopping 62 contracts.

 

At the MGE, there were no deliveries posted against the March contract.