March 13, 2006

 

US Wheat Outlook on Monday: Down 3-5 cents, following e-CBOT activity

 

 

U.S. wheat futures are expected to start Monday's open outcry session 3-5 cents lower, following the tone set in overnight e-CBOT activity, floor sources said.

 

In overnight e-CBOT trading, March wheat declined 7 1/2 cents to US$3.67 per bushel, May fell 5 1/2 cents to US$3.76, and July lost 6 1/2 cents to US$3.87.

 

Overnight at the KCBT, May dropped 6 3/4 cents to US$4.46 1/2 and July fell 8 cents to US$4.51 1/2.

 

The market was weaker overnight, there was some rain in parts of the eastern U.S. Central Plains and the forecast this weekend is calling for possible rain in the region, a floor analyst said. This should keep the market under pressure at the start, the analyst said. There wasn't much other wheat news out, although it continues to rain in the soft red wheat region of the eastern U.S. Midwest, he added.

 

Both the U.S. and European weather models are suggesting light to locally moderate showers and thundershowers during this coming weekend in the U.S. Central and Southern Plains, DTN Meteorlogix weather said.

 

Much of the region will be mainly dry through Thursday with below-normal temperatures in the northern sections of the region during the first part of the week and near to above normal in the southern sections of the region thru midweek, Meteorlogix weather reported.

 

In the eastern U.S. Midwest soft red wheat growing region, there is a chance for light to locally moderate precipitation through Thursday, with temperatures forecast near to above normal Monday and below normal through Thursday, Meteorlogix weather said. 
 

On technical charts, Friday's close near the lower portion of the daily trading range is a negative technical signal in CBOT May wheat, a technical analyst said. He sees first resistance in May wheat is at US$3.85 3/4 and then at US$3.90, Friday's high. First support sits at US$3.80 and then at US$3.74, last week's low.

 

For May KCBT, bulls still have the upside price momentum and the next upside price objective is US$4.60. First resistance is pegged at US$4.56, Friday's high, and then at US$4.60. First support is seen at US$4.46, and then at US$4.43, Friday's low, the technical analyst said.

 

Large non-commercial speculators are net long a combined 20,277 CBOT wheat futures and options as of March 7, the Commodity Futures Trading Commission reported Friday.

 

Large non-commercial speculators are net long 46,797 KCBT wheat futures and options on futures as of March 7, the CFTC reported.

 

At the MGE, large non-commercial speculators are net long 11,338 wheat futures and options on futures contracts, the CFTC reported Friday.

 

Cash wheat basis bids were mostly unchanged Monday 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 mixed with Minot, N.D., one cent lower at 39 cents under the May future.

 

At the CBOT, there were no deliveries posted against the March wheat contract, while at the Minneapolis Grain Exchange, 10 contracts were posted for delivery.

 

In other wheat news, the Grain Board of Iraq is waiting on non-AWB Ltd. wheat suppliers to submit a bid for its planned purchase of 500,000 metric tonnes of Australian wheat, said the head of the board Khalil Assi Monday. The Australians have asked the Grain Board to wait for them to submit a price by March 15, Assi said.

 

Kuwait is looking to buy 1 million metric tonnes of wheat from Hungary and is awaiting a price proposal, a Hungarian newspaper reported Monday.

 

Prices of wheat delivered to Asia may rise in the week ahead on expectations of strong demand and weather concerns for the U.S. wheat crop, Asian sources said.

 

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