April 19, 2006

 

US Wheat Outlook on Wednesday: Up 1-2 cents on follow through, crop concerns

 

 

U.S. wheat futures are expected to open 1 cent to 2 cents a bushel higher Wednesday on follow-through strength from recent gains and continued concerns over hot, dry conditions in the southern Plains, sources said.

 

In overnight e-cbot trade, May wheat was up 1/4 cent at US$3.55 1/4 and July was 1 3/4 cents higher at US$3.70.

 

The market's focus has been shifting to the new crop from the old crop, with the supply-driven fundamentals of drought conditions in the southern Plains a dominant force, an analyst said.

 

The southern Plains does have a chance for showers later this week and into the weekend, though northern and eastern areas see the best chance for significant showers, DTN Meteorlogix said. Rains are possible in Kansas early next week, which would help ease developing crop stress there.

 

While any rains would alleviate drought stress to a degree, most traders doubt that far-southern areas of the Plains, where the wheat is in poor shape, will receive enough rain to recharge parched soils and help revive the hard red winter wheat crop, sources said. As of Sunday, 32% of the U.S. HRW crop was in poor to very poor condition, up from 30% the previous week, with the Texas and Oklahoma crops in the worst shape, the U.S. Department of Agriculture said.

 

DTN Meteorlogix said the southern Plains will be mostly dry Wednesday with a few light showers in northern areas in the evening. Mostly dry conditions are expected in central and southern areas on Thursday, with light showers in the north. Friday will bring showers and thundershowers to the far south; mostly dry conditions are expected on Saturday; and scattered showers and thundershowers are seen developing Sunday.

 

In the northern Plains spring wheat areas, where farmers are behind on plantings, rain and snow showers were seen in central and eastern locations in the last 24 hours, with mostly dry conditions in the west. Showers are forecast for eastern areas Wednesday and Thursday, with mostly dry weather Friday and Saturday and a few light showers on Sunday, Meteorlogix said.

 

In news, though officials at Wheat Australia Ltd. could not confirm a sale to Iraq Wednesday, they were confident of making an announcement in the near future. Iraq's grain board said Tuesday it has finalized wheat purchases from Australian suppliers outside of the AWB and also from Germany. Iraq reportedly purchased 350,000 metric tonnes of wheat, which was reduced from 500,000 due to a request by the Australian suppliers.

 

Iraq also reportedly bought 150,000 tonnes of wheat from Germany.

 

Japan seeks 101,000 tonnes of wheat in a tender to be concluded on Thursday, which is expected to include 40,000 tonnes of U.S. wheat, 21,000 tonnes from Canada and 40,000 from Australia.

 

The U.K. exported 215,486 tonnes of wheat in February, down 11% from 243,220 tonnes shipped in January. While exports are down, U.K. wheat traders contend that shipments are in line with export targets.

 

Ukrainian farmers have planted spring wheat on 203,000 hectares to April 18, or nearly 33% of the planned total area, the agriculture ministry said Wednesday. Total planted area is expected to be 614,500 hectares, down from 480,000 in 2005, due to replantings caused by winter wheat damage last winter.