April 10, 2006

 

US Wheat Outlook on Monday: Up 2-4 cents on US wheat weather, gold, USDA

 

 

U.S. wheat futures were called to open up 2-4 cents per bushel Monday following higher overnight trade on concerns about the condition of the U.S. hard red winter wheat crop amid hot, dry U.S. Southern Plains weather, brokers said.

 

Lingering concerns about U.S. spring wheat plantings amid overly wet Northern Plains fields were seen lending support to Minneapolis Grain Exchange spring wheat futures, they added.

 

The government will release late Monday afternoon its weekly U.S. crop progress report, including a summary of U.S. spring wheat planting progress and state breakdowns of both hard red and soft red winter wheat crop conditions.

 

Meanwhile, Monday's U.S. Department of Agriculture monthly supply and demand data were seen as slightly bullish for wheat futures, while gains Monday in precious metals and crude oil futures were supportive for the three U.S. wheat futures markets, traders noted.

 

The USDA Monday lowered its forecast for 2005-06 U.S. wheat ending stocks by 10 million bushels to 532 million bushels due to expectations of less imports and stronger exports.

 

The USDA left unchanged its 2005-06 Argentine, Australian and E.U. wheat crop estimates at 12.10 million, 24.5 million and 122.95 million tonnes, respectively.

 

The USDA slightly raised its 2005-06 world ending wheat stocks number to 143.1 million tonnes from its March estimate of 142.62 million tonnes. The 2004-05 world wheat ending stocks tally was raised to 150.19 million tonnes from the USDA March estimate of 149.63 million.

 

U.S. wheat traders expected rolling again to be featured in Monday's pit trade, as the Goldman roll continues ahead of the April 28 first notice day for the three U.S. May wheat futures.

 

In the overnight e-CBOT session, most-active May wheat at the Chicago Board of Trade closed up 5 cents at $3.56 1/4 per bushel and July closed up 4 1/4 cents at $3.69.

 

"Prices of CBOT May wheat Friday closed lower but near the session high and the bulls had a good week last week," a technical source said.

 

"It will take a close back above resistance at last week's high of $3.68 1/2 to provide the bulls with better upside technical momentum," he added. "First resistance is seen at $3.66--Friday's high--and then at $3.68 1/2. First support lies at $3.60 1/2--Friday's low--and then at $3.55."

 

In overnight trade, KCBT May wheat ended up 6 cents at $4.36 per bushel and July closed up 5 cents at $4.42.

 

Prices for KCBT May wheat closed Friday near the session high and closed at the weekly high close, the technical source said.

 

"Bulls have regained good upside technical momentum, amid rekindled worries about a weather market in wheat due to dry and hot conditions forecast for the Plains states," he added. "A close below last week's low of $4.17 1/2 would provide the bears with some fresh downside technical momentum. First resistance is seen at $4.37 1/2--last week's high--and then at $4.40. First support is seen at $4.31--Friday's low--and then at $4.28 1/2--the bottom of last week's upside price gap on the daily bar chart."

 

The CFTC reported Friday that speculators in CBOT wheat futures for the week ended April 4 boosted their short holdings by 8,995 lots to hold 78,738 short positions and increased their long holdings by 4,088 lots to hold 62,142 long positions.

 

For CBOT wheat futures and options combined, speculators were short 67,067 lots, up 6,690 contracts from the week before, and long 62,994 contracts, up 2,423 lots from the previous week.

 

For KCBT wheat futures only, speculators for the week ended April 4 increased their long holdings by 1,797 lots to hold 41,641 long positions and decreased their short holdings by 752 lots to hold 6,272 short positions.

 

For KCBT wheat futures and options combined, speculators were long 40,532 lots, up 1,390 contracts, and short 4,615 contracts, down 873 lots from the previous week.

 

For MGE spring wheat futures only, speculators for the week ended April 4 cut their long holdings by 331 lots to 10,207 lots and cut short holdings by 24 lots to 277 lots.

 

For MGE spring wheat futures and options combined, speculators cut their long holdings by 308 lots to 9,957 contracts and cut their short holdings by 26 lots to 281 contracts.

 

Cash U.S. hard red winter, soft red winter and hard red spring wheat basis bids were mostly steady to firm Monday, grain merchandisers said.

 

In U.S. wheat export news, Taiwan on Monday sought 80,000 metric tonnes of U.S. No. 1 wheat for May-June shipment in a tender to be concluded Wednesday, a trader said.

 

In global wheat export news, Jordan said Monday it signed a contract to buy 100,000 metric tonnes of Syrian soft milling wheat outside the tender process.

 

In other global wheat news, India's first imports of wheat in more than six years is likely to arrive around April 23, a senior official at the State Trade Corp. of India, or STC (512531.BY), said Monday.