March 29, 2006

 

US Wheat Outlook on Wednesday: 1-2 cents higher on positioning, India

 

 

U.S. wheat futures are expected to start trading Wednesday 1-2 cents higher on position evening ahead of Friday's reports and news that India is considering importing additional amounts of wheat, floor sources said.

 

In overnight activity, CBOT May wheat rose 1 3/4 cents to $3.43 per bushel, and July gained 1/2 cent to $3.55.

 

Overnight at the KCBT, May ended 1 1/4 cents higher at $4.03 and July also increased 1 1/4 cents to $4.07 3/4.

 

There is not much news out this morning, but reports that India is talking about importing wheat and position squaring ahead of the planting and stocks reports on Friday are expected to support prices, a commission house analyst said.

 

According to India's Agriculture Minister, the country is considering importing 1.5-2.0 million metric tonnes of wheat to increase its buffer stocks. India's buffer stocks are estimated as of Mar. 1 at 3.6 million tonnes, down 36.8% on the year, according to government estimates.

 

In the U.S. Central Plains scattered showers in Texas and Oklahoma are expected Wednesday with scattered showers and thundershowers in much of the region Wednesday night and into Thursday, DTN Meteorlogix Weather said. Amounts should range from .25-1.00 inch and locally heavier in the eastern sections of the region but only a trace to .25 inch in the west. There is a chance for scattered to widely scattered light showers with locally heavier amounts during the weekend, DTN Meteorlogix Weather said. Temperatures are expected to near to above normal during the period.

 

In the eastern U.S. Midwest soft red winter wheat growing region, mainly dry conditions are expected Wednesday with a chance for showers and possible thundershowers Thursday or Friday. Rainfall should average .25-1.00 inch, before drier conditions return on Saturday. Temperatures are forecast above normal Thursday and near to above normal on Friday, DTN Meteorlogix weather said.

 

On technical charts, the next major downside objective remains the January low of $3.32 1/2 for CBOT May wheat, a technical analyst said. He pegs first resistance in CBOT May at $3.43 1/4, and then at $3.45. First support is seen at $3.38 1/2 and then at $3.35.

 

For May KCBT, the next major downside objective is closing prices below solid technical support at $3.85, the analyst said. First resistance is pegged at $4.04, this week's high and then at $4.08. First support is seen at $3.96 1/2, and then at $3.94.

 

Cash wheat basis bids were mixed Wednesday morning. Soft red wheat basis bids were mixed with Cincinnati down 4 cents at 19 cents under the May future.

 

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

 

Hard spring wheat basis bids were unchanged to mostly higher with Minot, N.D. two cents higher at 30 cents under the May future.

 

In other wheat news, exports of Ukrainian milling quality wheat are expected to decline over 36%, due to a decrease in production, the USDA's Foreign Agricultural Service reported Tuesday.

 

Production is expected to decline to an estimated 12.0 million metric tonnes in 2006 from the 18.7 produced in 2005. Exports are forecast at 1.5 million tonnes from 2005's 5.7 million tonne level.