March 31, 2006

 

US Wheat Outlook on Friday: Seen 3-5 cents higher after USDA reports

 

 

U.S. wheat futures are expected to begin Friday's open outcry session 3-5 cents higher following the release of the U.S. Department of Agriculture Prospective Plantings and Grain Stocks reports.

 

In overnight activity, CBOT May wheat rose 2 cents to $3.46 1/2 per bushel, and July gained 3/4 cent to $3.58.

 

Overnight at the KCBT, May ended 1 cent higher at $4.11 3/4 and July rose 1/4 cent to $4.16 per bushel.

 

The USDA reported that all wheat plantings totaled 57.128 million acres, below analyst's expectations that 58.294 million acres would be seeded.

 

All winter wheat acres totaled 41.404 million acres in line with the 41.405 average analyst estimate.

 

Spring wheat acres were pegged at 13.899 million acres by the USDA, lower than the 14.113 projected by analysts. Durum wheat acres were estimated at 1.825 million acres, sharply lower than the 2.633 average estimated by analysts and the 2.760 million acres seeded in 2005.

 

U.S. quarterly wheat stocks were 972 million bushels as of Mar. 1 versus expectations of 973 million and the 2005's Mar. 1 stocks estimate of 984 million bushels.

 

Wheat futures should be higher, said Don Rose, president of US Commodities. The report is more bullish hard red winter wheat than soft red and the market should have a firmer tone. "I think that a lot of the spring wheat acres are probably shifting to beans," he said.

 

All wheat acres are down over 1 million acres and that is supportive to wheat, a floor analyst said.

 

Hard red winter and spring wheat futures will be supported by the decline in spring wheat and durum acreage acres, he added.

 

In addition the calls for stronger corn futures prices will add support, however, the higher than expected acreage in soybeans is expected to weigh on soy futures and that could temper the tone in wheat, he said. After the reports have been digested, hard red winter wheat traders will keep a close eye on the weather, the analyst said.

 

In the U.S. Central Plains mainly dry conditions are forecast Friday with a chance for scattered showers and possible thundershowers during this weekend, DTN Meteorlogix weather said. Rainfall should average .25-1.00 inch and locally heavier in the east and some central locations and mostly less than .10 inch in the west. Temperatures are expected to average above normal, DTN Meteorlogix noted.

 

Scattered showers are forecast on Friday for the soft red winter wheat region of the US Midwest with amounts .25-1.00 inch. There is another chance for scattered showers on Sunday and into Monday in parts of the region, DTN Meteorlogix weather said.

 

On technical charts, first resistance in CBOT May is seen at $3.45 3/4, Thursday's high and then at $3.50. First support is pegged at Thursday's low of $3.42 and then at $3.38 1/2, and then at $3.35.

 

For May KCBT, it will take a close above $4.25 to provide bulls with some better upside technical momentum, the analyst said. First resistance is pegged at Thursday's high of $4.12 and then at $4.15. First support is seen at $4.07 and then at $4.04.

 

Cash wheat basis bids were mixed Friday morning. Soft red wheat basis bids were mixed with Cincinnati up 1 cent at 14 cents under the May future.

 

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

 

Hard spring wheat basis bids were unchanged to higher with Minot, N.D. three cents higher at 25 cents under the May future.