April 4, 2006

 

US Wheat Outlook on Tuesday: Flat-up 1 cent on technical recovery

 

 

U.S. wheat futures were called to open flat to up 1 cent Tuesday on a recovery after Monday's break amid a rise in Chicago Board of Trade wheat futures open interest, brokers said.

 

"There really isn't a lot going on here," said John Kleist, of Kleist Ag Consulting. "The crop condition ratings were low, but expectations are that they should improve next week because of the recent rains. The weather is good. It's drying out a bit in the Southwest, but there is nothing to signal a return to the drought."

 

The U.S. Department of Agriculture reported Monday in its first national crop-condition report of 2006 that the U.S. winter wheat crop was 38% in good-to-excellent condition as of Sunday, well below last year's 68% and the 10-year average of 54%, analysts noted.

 

The USDA said that 31% of the U.S. winter wheat crop was in very poor to poor shape.

 

Among key U.S. hard red winter wheat producing states, Kansas' crop was 38% in good to excellent versus last year's 74% in that shape; Oklahoma's crop was 11% in good, with none of the crop in excellent shape, versus last year's 70%; and Texas' crop was 7% in good to excellent versus last year's 69%.

 

Still, the U.S. soft red winter wheat crop's good condition underpinned the rating. Illinois' crop was 76% in good to excellent versus last year's 61%; Arkansas' crop was 67% in good to excellent versus last year's 42% in that shape; and Ohio's crop was 73% in good to excellent versus last year's 66%.

 

In Monday's report, the USDA also noted 2% of the U.S. spring wheat crop had been planted versus last year's 4% and the average of 3%.

 

In the overnight e-CBOT session, most-active May wheat at the Chicago Board of Trade closed up 1/4 cent at $3.42 1/4 after closing lower and near the session low on Monday.

 

Technical damage has occurred to CBOT May wheat recently to still suggest that a market top is in place, a technical source said. A close below the March low of $3.38 1/2 would provide the bears with fresh downside technical power. It will take a close back above resistance at $3.65 to provide the bulls with fresh upside technical momentum.

 

First resistance for CBOT May wheat was seen at $3.50 1/2 - last week's high - and then at $3.55. First support was seen at $3.40 1/2 - Monday's low - and then at $3.35, the technical source said.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Tuesday; soft red winter wheat basis bids were mixed, with a 6-cent drop in Louisville, Ky.; and spring wheat basis bids were steady to firm, grain merchandisers said.

 

In wheat export news, Japan said it wouldn't seek wheat in a weekly tender this week while Jordan's buy tender for 50,000 tonnes of hard wheat closes April 12.