March 21, 2006

 

US Wheat Outlook on Tuesday: Seen steady, following e-CBOT's tone

 

 

U.S. wheat futures are predicted to start Tuesday's open auction trading session steady following the tone set in overnight activity and after recent price weakness, floor sources said.

 

In overnight activity, May wheat gained 1/2 cent to $3.50 3/4 per bushel, and July ended unchanged $3.62 1/4.

 

Overnight at the KCBT, May slipped 1/4 cent to $4.13 1/2, while July rose 1/4 cent to $4.15.

 

The market could see some support from oversold conditions in wheat, a CBOT floor trader said.

 

Over the last six sessions, CBOT May wheat has fallen more than 17 cents from its settlement price last Monday and more than 30 cents from the high reached just over two weeks ago.

 

Nothing is outrageously bullish or bearish, so wheat could trade both sides of unchanged today, a floor analyst said. It depends on what the funds want to do, he added.

 

Several U.S. hard red winter wheat states released crop condition reports Monday afternoon.

 

Kansas reported that 38% of the crop is now rated poor-to-very poor, compared with 35% last week with 24% of the crop rated in good-to-excellent condition, down 5 percentage points from last week.

 

In Oklahoma, 70% of the crop is in poor-to-very poor condition, down 2 percentage points from last week.

 

Texas reported that 89% of the crop is rated in poor-to-very-poor condition, unchanged from the previous week.

 

Rain and snow may linger in northeast sections of the U.S. Central Plains Tuesday, with a chance for rain or snow on Wednesday in the region, DTN Meteorlogix said. Mainly dry conditions are forecast for Thursday through Saturday, with temperatures expected to average below or well below normal through Thursday, DTN Meteorlogix said.

 

In the eastern U.S. Midwest soft red wheat growing region, up to 1/4 inch of snow is possible Tuesday, with mainly dry conditions on Wednesday and Thursday, DTN Meteorlogix weather said. Temperatures are forecast to average below normal.

 

On technical charts, prices hit a fresh two-month low after very beneficial moisture fell in the central plains this weekend, a technical analyst said. He pegs first resistance in CBOT May at $3.54 1/2, Monday's high and then at $3.60. First support is seen at $3.47 1/2 and then at $3.45.

 

For May KCBT, bears have gained downside technical momentum. First resistance is seen at Monday's high of $4.16, and then at $4.20. First support is pegged at $4.08 1/2, Friday's low, and then at $4.05.

 

Cash wheat basis bids were unchanged to lower Tuesday morning. Soft red wheat basis bids were mixed with Cincinnati 3 cents lower at 26 cents under the May future.

 

Hard red wheat basis bids were mostly unchanged with Hutchinson, Kan., unchanged at 11 cents under the May.

 

Hard spring wheat basis bids were mostly unchanged with Minot, N.D., unchanged at 39 cents under the May future.

 

In other wheat news, Iraq's purchase of 500,000 metric tonnes of Australian wheat hasn't been completed as it is waiting on non-AWB Ltd. suppliers to submit a price, an official with the Iraqi Grain Board said.

 

Suppliers outside the AWB recently set up a company called Australia Limited to handle wheat exports to Iraq. Monopoly wheat supplier AWB has been suspended from exporting to Iraq until the completion of an inquiry into whether it broke Australian law by paying kickbacks to Saddam Hussein's regime under the oil-for-food program.