March 30, 2006

 

US Wheat Outlook on Thursday: Expected steady start on outside markets

 

 

U.S. wheat futures are forecast to begin trading at steady levels as stronger precious metals markets provide underlying support for commodity futures Thursday morning, floor sources said.

 

In overnight activity, CBOT May wheat slipped 1/4 cent to $3.41 1/2 per bushel, and July fell 3/4 cent to $3.53 3/4.

 

Overnight at the KCBT, May finished unchanged at $4.06 1/2 and July fell 1/4 cent to $4.11 1/2 per bushel.

 

The market should start out firm on stronger precious metals futures and a weaker U.S. dollar, a floor analyst said. Export sales were nothing spectacular but within expectations, but there was little news out overnight, he added.

 

The U.S. Department of Agriculture reported that weekly wheat exports were 512,600 metric tonnes for the week ended March 23. Included in this total was 4,000 tonnes for delivery in the 2006-07 crop year. Analysts had expected sales of 250,000-550,000 tonnes.

 

Everybody is waiting on the report, a commission house analyst said. Wheat could see some support from pre-report positioning, he noted.

 

On Friday, the USDA is scheduled to release the Wheat Prospective Plantings and Quarterly Grain Stocks reports at 7:30 a.m. CST.

 

The average winter wheat acreage estimate of 9 analysts polled by Dow Jones is 41.405 million acres compared to the 2005 figure of 40.433 million acres.

 

The average of seven analysts' estimates of quarterly wheat stocks was 973 million bushels versus the 2005 March 1 stocks estimate of 984 million bushels.

 

In the U.S. Central Plains there is a chance for scattered showers Thursday with amounts 0.10-0.75 in the east and less than 0.10 inch in the west, DTN Meteorlogix Weather said. The heaviest amounts should occur in eastern Nebraska and northeast Kansas.

 

Another chance for scattered showers and thundershowers redevelops on Saturday and into Sunday with amounts expected 0.10-0.30 inch in the west and 0.25-1.00 inch and locally heavier in the central and eastern areas. Temperatures are forecast to average near to above normal in the period, DTN Meteorlogix Weather noted.

 

In the eastern U.S. Midwest soft red winter wheat growing region, scatted showers and possible thundershowers are forecast for Thursday night into Friday morning, DTN Meteorlogix Weather said. Amounts should average 0.25-1.00 with locally heavier amounts possible. Another chance for scattered showers and thunderstorms is expected on Sunday into Monday with coverage of 0.25-1.00 inch and locally heavier, DTN Meteorlogix added.

 

On technical charts, it will take a close above resistance at $3.65 in CBOT May futures to provide bulls with fresh technical momentum, a market technician said. He sets first resistance at Wednesday's high of $3.45 3/4 and then at $3.50. First support is seen at $3.38 1/2 and then at $3.35.

 

For May KCBT, first resistance is pegged at $4.09, Wednesday's high and then at $4.12. First support is seen at $4.04, and then at $4.00.

 

Cash wheat basis bids were mixed Thursday morning. Soft red wheat basis bids were unchanged to higher with Cincinnati up 4 cents at 15 cents under the May future.

 

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

 

Hard spring wheat basis bids were unchanged to higher with Minot, N.D., two cents higher at 28 cents under the May future.

 

In other wheat news, the International Grains Council estimates 2005-06 world wheat production at 615.5 million metric tonnes, up 500,000 tonnes from its February estimate of 615.0 million tonnes, but down from the 2004-05 crop of 627.8 million tonnes.