April 24, 2006

 

US Wheat Outlook on Monday: Up 2-4 cents on dollar, crude despite US rain

 

 

U.S. wheat futures were called to open up 2-4 cents on Monday following firm overnight wheat prices amid a break in the U.S. dollar and gains in energy futures, brokers said.

 

Monday's higher wheat futures markets calls bucked overnight rains in the droughty U.S. Southern Plains, and forecasts for more U.S. HRW belt rains and drier weather this week in the U.S. Northern Plains spring wheat belt, brokers said.

 

"I think the outside markets are running the show today, and everyone is calling the market higher on that basis," said Sid Love, of Kropf & Love Consulting in Kansas.

 

Scattered rains of .25-.75 inch fell over south-central Kansas overnight with scattered light showers elsewhere in central Kansas. Temperatures were above to much above normal with highs in the 80s to middle 90s Fahrenheit.

 

"We got moisture in the central part of Kansas and in Nebraska," Love said. "And where the wheat is still growing, it's going to be cooler this week. If there is any freezing weather in Kansas, it could be a problem."

 

In the overnight e-CBOT session, most-active July wheat closed up 3 cents at US$3.68 1/4.

 

"It will take a close back above resistance at US$3.75 to provide the bulls with some fresh upside technical momentum," said a technical source.

 

"A close below Friday's low of US$3.57 1/2 would provide the bears with fresh downside near-term technical momentum," he added.

 

First resistance for CBOT July wheat was seen at US$3.68--Friday's high--and then at US$3.70--last week's high. First support lies at US$3.60 and then at US$3.57 1/2.

 

Kansas City Board of Trade July wheat ended overnight up 3 1/4 cents at US$4.47 1/2 per bushel.

 

The CFTC reported Friday that speculators in CBOT wheat futures and options combined were net long: long 70,017 lots, up 2,013 contracts from the week before; and short 61,692 contracts, up 699 lots from the previous week.

 

For KCBT wheat futures and options combined, speculators were long 48,430 lots, down 2,377 contracts, and short 4,549 contracts, up 966 lots from the previous week.

 

For MGE spring wheat futures and options combined, speculators boosted their long holdings by 1,563 lots to 13,138 contracts and cut their short holdings by 14 lots to 595 contracts.

 

U.S. wheat futures brokers expected the U.S. Department of Agriculture to report a slight drop in U.S. winter wheat crop conditions in Monday afternoon's report.

 

Last week, the USDA said the U.S. winter wheat crop was 39% in good-to-excellent condition, slightly below last week's 41% and well below last year's 69%.

 

In Kansas, the nation's largest hard red winter wheat producing state, 38% of the crop was rated in good-to-excellent condition, down from the 42% reported last week. Oklahoma's crop was 5% in the good, down from last week's 11% rating, with none of the crop in excellent condition. In Texas, 4% of the crop was rated in good-to-excellent condition, versus 7% last week.

 

"We'll probably be down one or two points (this week)," said Love. "But it could improve next week."

 

Ten percent of the U.S. spring wheat crop had been planted as of April 16, behind last year's 21% and the five-year average of 16%, the USDA reported last Monday.

 

Spot cash U.S. hard red winter wheat basis bids were steady to firm Monday, with a 4-cent gain in Portland, Ore.; soft red winter wheat basis bids were steady to weak, with a 7-cent loss in Kansas City SRW truck bids; and spring wheat basis bids were mixed, with a 5-cent loss in Billings, Mont. and a 1-cent gain in Portland, Ore., grain merchandisers said.

 

U.S. wheat export news was quiet.