April 5, 2006

 

US Wheat Outlook on Wednesday: Flat-down on US HRW forecasts, quiet export

 

 

U.S. wheat futures were called to open steady to weak Wednesday following similar overnight trade and as 7- to 11-day weather forecasts point to a better chance of rains in some dry U.S. hard red winter wheat growing areas, brokers said.

 

"There isn't a whole lot of new news," said Don Roose, of U.S. Commodities, on Wednesday. "It looks the dry areas of west Texas and southwest Kansas, in the 7-11 day forecast, might have some chances of moisture."

 

Thursday's weekly U.S. wheat export sales data, which Roose feared could be disappointing, and next Monday's crop progress reports, were among the major factors seen driving U.S. wheat trade Wednesday and through the week, he added.

 

In the overnight e-CBOT session, most-active May wheat at the Chicago Board of Trade closed steady at $3.42 3/4 per bushel.

 

Technical damage has occurred to CBOT May recently to suggest that a market top is in place, a technical source said.

 

"The market has recently 'paused' and that is not bullish," he noted. "The next downside objective for the bears is to close prices below the March low of $3.38 1/2. That would open the door to a move to solid support at the January low of $3.32 1/2. It will take a close back above resistance at $3.55 to provide the bulls with some fresh upside technical momentum."

 

First resistance for CBOT May wheat was seen at $3.44 1/2 - Tuesday's high-and then at $3.50. First support was seen at $3.40 1/4 - Tuesday's low--and then at $3.38 1/2 - the March low - and then at $3.35.

 

Meanwhile, U.S. Commodities' Roose expected Minneapolis Grain Exchange hard red spring wheat futures to remain well-bid versus CBOT wheat.

 

"I don't see it (the market) dropping," he said. "We have to see if we can buy back some spring wheat acres up there instead of soybeans."

 

The U.S. Department of Agriculture last Friday estimated a surprising 1% drop in spring wheat plantings this year. Traders have said some U.S. spring wheat farmers would prefer to grow soybeans.

 

Cash U.S. hard red winter wheat basis bids were steady Wednesday; soft red winter wheat basis bids were steady to firm, with a 4-cent gain in St. Louis; and spring wheat basis bids were steady, grain merchandisers said.

 

U.S. wheat export news was quiet, while Morocco tendered to buy 115,000 metric tonnes of soft European Union wheat.

 

In other global wheat news, the French state grains board, Office National Interprofessionnel des Cereales, or ONIC, estimated French 2006 soft wheat plantings would rise 1.3% from last year and hard wheat plantings would jump 8.9%.

 

The USDA's attache in India revised India's marketing year 2006 (Apr - Mar) wheat production down 1 million tonnes to 72.0 million tonnes, due to abnormal weather conditions in February and March.

 

The post said India may import up to 2.0 million tonnes of wheat in the latter half of marketing year 2006/07 (April- March).

 

Pakistan lowered its 2005-06 wheat crop estimate to 20.5 million tonnes from the previous estimate of 22.0 million tonnes and last year's production of 21.6 million tonnes, due to poor growing weather, the agriculture minister said.

 

Australian wheat exporter AWB Ltd. (AWB.AU) said it has more wheat available for sale if extra demand comes from India. AWB now is executing the sale of 500,000 tonnes to India.