March 24, 2006

 

US Wheat Outlook on Friday: Steady start seen following e-CBOT tone

 

 

U.S. wheat futures are predicted to begin Friday's session at steady levels, following the tone in overnight activity, with the lack of significant news keeping the market searching for direction, floor sources said.

 

There's not much in the way of news to move the market in either direction, a floor analyst said. However, the market has sold off this week and could be due for some position squaring before the weekend, he said. In addition, outside markets, like silver and gold are higher and this could lend some support, he added.

 

In overnight activity, May wheat rose 1 cent to $3.45 per bushel, and July ended unchanged at $3.56 1/4.

 

Overnight at the KCBT, May edged 1/4 cent lower to $4.07 1/4 while July rose 1/4 cent to $4.11.

 

Mostly dry conditions are expected in the US Central Plains hard red winter wheat growing regions into Sunday before light rain develops from Kansas northward late Sunday into Monday, DTN Meteorlogix weather said. Additional rain develops in the region on Wednesday with more rain and snow expected on Thursday, with precipitation totals of .30-1.50 inches with locally heavier amounts expected. Temperatures are forecast below to much below through Sunday, near to above normal Monday-Wednesday, DTN Meteorlogix noted.

 

Dry conditions are forecast until Monday in the eastern US Midwest soft red wheat growing region. Light rain/snow is forecast on Monday lingering into Tuesday. Mostly dry conditions return on Wednesday before rain develops on Thursday continuing on Friday with moderate to heavy amounts expected, DTN Meteorlogix said.

 

On technical charts, prices hit a fresh 2-month low and the next downside objective in May CBOT wheat is the January low of $3.43 1/2, a technical analyst said. He sets first resistance in CBOT May at $3.48 1/2, and then at $3.50. First support is seen at $3.43 1/2 and then at $3.40.

 

For May KCBT, the bear's next major objective is closing prices below major psychological support below $4.00, the analyst said. First resistance is seen at $4.16, Thursday's high and then at $4.20. First support is seen at $4.04, Thursday's low and then at $4.00.

 

Cash wheat basis bids were unchanged to mixed Friday morning. Soft red wheat basis bids were unchanged to lower with Cincinnati 4 cents lower at 18 cents under the May future.

 

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

 

Hard spring wheat basis bids were also unchanged to slightly higher with Minot, N.D. one cent higher at 37 cents under the May future.

 

In other wheat news, 14,500 metric tonnes of U.S. wheat was purchased by four South Korean flour mills in a tender concluded on Friday, a trader in Seoul said. 6,500 tonnes were soft white wheat, 2,100 hard red winter wheat and 5,900 tonnes were dark northern spring wheat, sources said.

 

The Australian wheat export marketing monopoly operated by AWB Ltd. (AWB.AU) must be scrapped in the wake of revelations about kickbacks the company paid to the Iraqi regime of Saddam Hussein, the chairman of the grower lobby Grains Council of Australia said Friday.

 

Friday afternoon after the close, the Commodity Futures Trading Commission will the commitment of traders report as of Mar. 21.