April 12, 2006

 

US Wheat Outlook on Wednesday: Steady-down 1 cent after strong gains

 

 

U.S. wheat futures are expected to open steady to 1 cent a bushel lower Wednesday on the overnight trend and as the market catches its breath after the recent spike to new contract highs in Kansas City and Minneapolis and a four-week top in Chicago, sources said.

 

In overnight e-cbot trade, May wheat was down 3/4 cent to $3.66 3/4 and July was down 1 1/4 cents at $3.79 1/4.

 

Renewed bouts of speculative buying and concerns over continued hot, dry conditions in the southern Plains have been the main catalysts for surging wheat prices, traders and analysts said. Market participants are keeping their eyes on the weather forecasts for any break in the hot, dry conditions that have taken a toll on Texas and Oklahoma HRW wheat.

 

Participants also will keep their eyes on the Kansas City Board of Trade for indications that the price rise there will resume amid such a bullish weather situation, since that market has taken the leadership role to the upside, a trader said.

 

Some northern areas of the southern Plains hard winter wheat belt saw light showers in the last 24 hours, but with rain amounts less than 0.10 inch and temperatures well above normal. Mostly dry conditions are expected in the southern Plains through Friday, which will likely increase crop stress, while Saturday brings the chance for a few thundershowers to northern and eastern areas of the belt, DTN Meteorologix said.

 

High temperatures are expected to range from the 80s Fahrenheit to the mid-90s, with a bit cooler readings on Saturday and Sunday.

 

The six- to 10-day outlook calls for above-normal temperatures early in the period and near to below-normal readings later. Rainfall is expected to be below normal, Meteorlogix said.

 

The western Midwest and northern Plains saw scattered showers with 0.10-0.50 inch of rain in the last 24 hours, which benefits the crops there. Mostly dry conditions are expected Wednesday with a chance for light showers in the north. Showers and thundershowers are possible over the weekend.

 

In the soft red winter wheat areas of the eastern Midwest, light rain and drizzle fell over northern locations while mostly dry conditions were observed elsewhere. Episodes of light rain are possible Wednesday through Friday in northern and eastern areas.

 

In northern Plains hard red spring wheat areas, mostly dry conditions are expected this week and through the weekend, which is expected to allow farmers to make up time on plantings that had been delayed by heavy rains.

 

In other news, Wednesday marks the fourth day of the Goldman roll, in which the firm rolls positions from the May contract into later months ahead of the April 28 first notice day. The roll ends with Thursday's market close.

 

In export news, Taiwan on Wednesday bought 40,000 metric tonnes of U.S. No. 1 wheat for May 14-28 shipment.

 

Jordan bought 50,000 tonnes of hard wheat of E.U., Russian Ukrainian, Kazakh, Argentinian and Canadian origin for May 15 delivery.

 

Morocco seeks 40,000 tonnes of hard wheat for end-August delivery. The government said April 5 that it was seeking 115,000 tonnes of soft E.U. wheat for May 31 delivery.

 

Turkey expects to sell 275,000 tonnes of wheat, which includes up to 150,000 tonnes of red milling wheat, 50,000 tonnes of durum and 75,000 tonnes of white feed barley.