March 23, 2006

 

US Wheat Outlook on Thursday: Called to open steady to slightly lower

 

 

U.S. wheat futures are expected to start Thursday's trading session steady to slightly lower as the lack of fresh inputs are expected to keep futures in choppy, 2-sided trade, a floor analyst said.

 

In overnight activity, CBOT May wheat gained 1/4 cent to $3.49 1/2 per bushel, while July slipped 1/2 cent to $3.61 1/2.

 

Overnight at the KCBT, May slipped 1 3/4 cents to $4.15 1/4 while July fell 1 1/2 cents to $4.19.

 

Export sales were within the range expected, but there is no other fresh news and outside markets are weaker this morning, a floor trader said.

 

The U.S. Department of Agriculture reported Thursday morning that weekly wheat export sales totaled 482,600 metric tonnes for the week ended Mar. 16. From this total, 50,400 tonnes was for delivery in 2006-07 crop year. Analysts had expected sales between 300,000 and 500,000 tonnes.

 

The market is "stuck in a rut," and people seem to be losing interest, a commission house trader said. Wheat could be in the role of a follower today, looking to the other pits for direction. Trading could be choppy and 2-sided, he added.

 

Mainly dry conditions are expected Friday and Saturday in the US Central Plains with a chance for light to locally moderate precipitation of .10-.50 inch and locally heavier in northern and eastern areas of the region on Sunday and Monday, DTN Meteorlogix weather said.

 

In the 6-to-10 day outlook, precipitation should average near to above normal in the south and east, near to below normal northwest, DTN Meteorlogix said.

 

On technical charts, prices Wednesday traded a bearish "outside day" down on the daily bar chart in CBOT May wheat, a technical analyst said. He sees first resistance in May at $3.55, and then at $3.60. First support is seen at $3.47 1/2 and then at $3.45.

 

For May KCBT, bears still have some downside momentum, the analyst said. First resistance is pegged at $4.22, Wednesday's high and then at $4.25. First support is seen at $4.13, $4.08 1/2, and then at $4.05.

 

Cash wheat basis bids were unchanged to slightly higher Thursday morning. Soft red wheat basis bids were unchanged to higher with Cincinnati 4 cents higher at 14 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 38 cents under the May future.

 

In other wheat news, Syria's General Establishment for Cereal Processing and Trade, or Hoboob, said Thursday that it canceled a tender to sell 40,000 metric tonnes of Syrian wheat. No reason was given by the board why the tender was canceled, a Hoboob official said.

 

Australian wheat exporter AWB Ltd. (AWB.AU) said it expects India will need to import more wheat in 2006 to make up for an expected downturn in domestic production. If local Indian reports are to be believed, wheat production in India in 2006 could fall to 70 million metric tonnes, down from the original forecast of 75 million tonnes and off from the current official projection of 73 million tonnes, said Michael Vaughan, an AWB manager.

 

The amount of winter grains in the Ukraine in poor condition has risen to 41% from 35% at the beginning of March due to severe winter frosts, the agriculture ministry said Thursday. 32.5% of winter grains are in satisfactory condition compared to 39% two weeks ago the ministry said.

 

Egypt was the largest importer of Russian grain in February, importing 158,291 metric tonnes out of total exports of 761,633 tonnes, according to a report by grain trader Yugtransitservice Thursday.